Palm oil declined for a third day on concern that near-record high stockpiles in Malaysia, the world’s second-largest producer, will further curb prices.
The contract for May delivery lost as much as 0.6 percent to 2,384 ringgit ($767) a metric ton on the Malaysia Derivatives Exchange, before ending the morning session at 2,388 ringgit in Kuala Lumpur. The most-active contract has tumbled 27 percent in the past year. Some investors deem an asset to be in a bear market if prices drop 20 percent or more.
Palm is poised to slump to less than 2,000 ringgit a ton on increased global supplies of cooking oils, Dorab Mistry, director at Godrej International Ltd., told a conference yesterday. While the inventories may drop to about 2.1 million tons, they’ll rebound close to 3 million tons by the end of this year, said Mistry. Reserves reached a record 2.63 million tons in December.
“The sentiment from the conference, which was overall bearish, is likely to influence the price movement today,” said Ryan Long, vice president of futures and options at OSK Investment Bank Bhd. in Kuala Lumpur. “Concerns over the high stockpiles are still there.”
Inventories, which were at 2.58 million tons in January, may have decreased to 2.44 million tons last month, according to a Bloomberg survey published this week. That would still be 18 percent higher than the 2.06 million tons in February last year. Official data from the Malaysian Palm Oil Board are due for release on March 11.
Soybean oil for May delivery dropped 0.7 percent to 49.91 cents a pound on the Chicago Board of Trade. Soybeans for May delivery fell 0.2 percent to $14.635 a bushel.
Refined palm oil for delivery in September lost 0.2 percent to 6,596 yuan ($1,060) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month lost 1 percent to 8,262 yuan a ton.
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