(For physical price assessments, see MPOI1.)
Dec. 12 (Bloomberg) -- Palm oil fell for a fourth day to the lowest level in three weeks on speculation that demand for the tropical oil is slowing during the winter season as buyers switch to substitutes.
The contract for delivery in February lost 0.7 percent to 2,612 ringgit ($809) a metric ton on the Bursa Malaysia Derivatives, the lowest price at close for the most-active contract since Nov. 20. Futures climbed 7.1 percent this year, heading for the first annual gain since 2010.
China, the world’s biggest cooking oil consumer, may reduce agricultural stockpiling, limiting demand for farm goods imports, Deutsche Bank AG said in a 2014 outlook report on Dec. 10. Palm’s discount to soybean oil was at around $90 a ton today compared with $297 at the beginning of this year, reducing the appeal of the oil in food and fuel, according to data compiled by Bloomberg. Palm oil clouds in cooler temperatures.
“Countries in the northern hemisphere such as China, are cutting down on their stockpiles,” Tan Chee Tat, an analyst with Phillip Futures Pte in Singapore. “China is shifting away from palm oil due to the narrowing discount to soybean oil or other competing oilseeds. The weak export demand is likely to persist for some time.”
Exports from Malaysia to China fell 11 percent in the first 10 days of this month from the same period in November, estimates from SGS (Malaysia) Sdn. show. Shipments to India declined 60 percent and to the E.U. dropped 56 percent.
Soybean oil for March delivery was little changed at 40.75 cents a pound on the Chicago Board of Trade. Soybeans for delivery in January lost 0.7 percent to $13.3475 a bushel.
Refined palm oil for May delivery fell 0.9 percent to close at 6,206 yuan ($1,022) a ton on the Dalian Commodity Exchange. Soybean oil ended 0.8 percent lower at 7,196 yuan.
--Editor: Thomas Kutty Abraham