(For physical price assessments, see MPOI1.)
Sept. 10 (Bloomberg) -- Palm oil fell the most in more than six weeks on speculation that production in Malaysia may expand after gaining for a sixth month in August and as weakening crude oil prices cut the appeal of vegetable oils as biofuel.
Palm for November delivery declined 2 percent to 2,351 ringgit ($719) a metric ton on the Bursa Malaysia Derivatives, the steepest drop at close for the most-active contract since July 25. Palm oil for physical delivery in September was at 2,380 ringgit, data compiled by Bloomberg show.
Output gained 3.6 percent to 1.74 million tons from July, the highest level since December, according to data from the Malaysian Palm Oil Board. Production is typically highest from July to October each year. Inventories were 1.67 million tons, little changed from July, and 1.2 percent higher than June which was the lowest level since March 2011, board data shows.
“September production is going to be close to 2 million tons,” said Ben Santoso, an analyst at DBS Vickers Securities Pte. in Singapore. “I’m expecting prices to come down over the next 30 days because of the prospects of higher inventories.”
West Texas Intermediate fell for a second day as U.S. President Barack Obama said that he wasn’t confident he will get congressional approval for a military strike against Syria, damping speculation the conflict will threaten oil exports from the region. Use of palm for fuel is expected to advance 11 percent to 6.34 million tons in 2013, according to Hamburg-based research company Oil World.
“Crude palm oil is being used as a feedstock for biodiesel, so the weakness in crude oil is causing some selling pressure,” Sim Han Qiang, an analyst at Phillip Futures Pte, said by phone from Singapore.
Soybeans for November delivery fell 0.6 percent to $13.48 a bushel on the Chicago Board of Trade, while soybean oil for delivery in December was little changed at 43.19 cents a pound. Refined palm oil for January delivery retreated 2.6 percent to 5,494 yuan ($898) a ton on the Dalian Commodity Exchange, the steepest drop at close since July 26. Soybean oil lost 1.6 percent to end at 7,192 yuan a ton.
--Editors: Thomas Kutty Abraham, Ovais Subhani