Bloomberg News

Palm Drops to Week Low on Declining Rupee, China’s Cash Crunch

June 21, 2013

Palm oil fell to the lowest level in a week on concerns that a weakening Indian currency and slowing growth in China will curb imports by the biggest buyers of the commodity used in everything from noodles to biofuel.

The contract for September delivery lost 0.9 percent to 2,439 ringgit ($762) a metric ton on the Bursa Malaysia Derivatives, the lowest closing level for most-active futures since June 14. Palm for local physical delivery in July was at 2,455 ringgit, according to data compiled by Bloomberg.

Interbank lending rates spiked to record in China this week because of a cash crunch, amid waning confidence about the prospects for the world’s second-largest economy. The rates retreated today after the monetary authority was said to have made funds available to lenders. India’s rupee headed for its biggest weekly loss since September 2011 after plunging to a record against the U.S. dollar yesterday.

“In India, the rupee has depreciated quite a bit over the past week, so that could impact their purchasing” power, said Ivy Ng, an analyst at CIMB Investment Bank Bhd. China’s financial and economic situation “could lead to short-term slowing down of demand.”

Goldman Sachs Group Inc., Morgan Stanley and UBS AG have cut their 2013 GDP forecasts for China as the country’s manufacturing and exports growth trailed estimates.

Refined palm oil for January delivery dropped 3.2 percent, the biggest loss at close since Feb. 25, to 5,998 yuan ($978) a ton on the Dalian Commodity Exchange, while soybean oil for delivery in the same month fell 2.8 percent to 7,478 yuan.

Soybean oil for December delivery fell 0.1 percent to 47.16 cents a pound on the Chicago Board of Trade, while soybeans for delivery in November declined 0.4 percent to $12.7975 a bushel.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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