(For physical price assessments, see MPOI1.)
Dec. 13 (Bloomberg) -- Palm oil retreated the most in three months on speculation that demand for the commodity used in everything from noodles to biofuels is faltering amid increasing supplies of alternate oils.
The contract for delivery in February lost 2 percent to 2,561 ringgit ($792) a metric ton on the Bursa Malaysia Derivatives, the biggest drop at close for the most active contract since Sept. 10. It was the fifth day of declines, the worst run since July. Futures lost 4.1 percent this week, snapping four weeks of gains.
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 that clouds in cooler temperatures, according to data compiled by Bloomberg. 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.
“Toward the winter, people will probably avoid palm oil,” said Hiro Chai, vice president at CIMB Futures Sdn. in Kuala Lumpur. “Soybean oil is as competitive as palm oil now, so there’s a switch from palm oil usage to soybean oil in these colder months. That’s why exports are a bit lackluster.”
Global soybean production will reach a record 284.94 million tons in 2013-2014 from 268.02 million a year earlier, the U.S. Department of Agriculture estimates. Canola harvest in Canada, the world’s largest grower, may climb 29 percent to a record 18 million tons, Statistics Canada said Dec. 4.
“There’s a lack of demand,” said Sandeep Bajoria, chief executive officer of Sunvin Group in Mumbai. “India has been buying very little because enough stocks are available and the local crops are are coming into the market. There’s a lot of pressure from soft oils because of the good crops all over.”
Soybean oil for March delivery declined 0.9 percent to 40 cents a pound on the Chicago Board of Trade, extending a 1 percent drop yesterday. Soybeans for delivery in January lost 0.4 percent to $13.18 a bushel, extending yesterday’s 1.5 percent decline, the most since Nov. 15.
Refined palm oil for May delivery fell 2.4 percent to 6,058 yuan ($998) a ton on the Dalian Commodity Exchange, the lowest price at close since Oct. 18. Soybean oil retreated 2.1 percent to 7,044 yuan, the lowest close since Oct. 8.
--Editor: Thomas Kutty Abraham