Palm Oil Declines to Six-Week Low on Stockpiles, Soybean Crop

By Claire Leow

Jan. 15 (Bloomberg) -- Palm oil dropped to the lowest level in six weeks on prospects for a record world soybean harvest and as crude oil and soybean oil declined.

“The supply-demand outlook for palm doesn’t look good,” said Ryan Long, a futures trader at OSK Investment Bank Bhd. in Kuala Lumpur. “Outside factors like crude, soy do not seem to be helping.” There may be further losses next week, Long said.

The contract for March delivery dropped 1.7 percent to 2,487 ringgit ($745) a metric ton on the Malaysia Derivatives Exchange, the lowest close since Dec. 3. It has lost 5.3 percent this week, extending last week’s 1.4 percent drop.

The U.S. Department of Agriculture forecast a record U.S. soybean crop of 3.361 billion bushels on Jan. 12, 1.3 percent more than projected last month and 13 percent more than last year’s harvest. It predicted world soybean production in the year that began Oct. 1 at a record 253.4 million tons, up from 250.3 million forecast a month ago and 210.9 million last year.

“Grains and oilseed markets are still struggling to find a base post the bearish USDA report,” said Scott Briggs, an agricultural commodities strategist at Australia & New Zealand Banking Group Ltd., in a report today.

March-delivery soybeans on the Chicago Board of Trade fell as much as 0.5 percent, extending yesterday’s 0.9 percent loss. They traded 0.4 percent lower at $9.805 a bushel at 5:57 p.m. Singapore time. Soybean oil for March delivery lost 0.5 percent to 38.34 cents a pound at the same time, extending a 1.2 percent decline yesterday.

Palm oil stockpiles in Malaysia, the top producer after Indonesia, surged 16 percent in December to 2.24 million tons, the second-highest level on record. Exports slumped 20 percent to 1.21 million tons, the Palm Oil Board said Jan. 11.

Malaysian Exports

Exports from the country rose 9.8 percent to 669,758 tons in the first 15 days of January, preliminary estimates by independent market surveyor Intertek showed today. Still, the figure “was rumored at 680,000 yesterday,” Long said.

February-delivery crude oil dropped 0.4 percent to $79.07 a barrel, its fifth day of decline, at 5:03 p.m. Singapore time.

China may be oversupplied with soybeans in the first quarter as imports are expected to be about 4.5 million tons in January, a survey by the China National Grain & Oils Information Center said today.

In China, soybeans for September delivery in Dalian dropped 0.1 percent to 3,915 yuan ($574), down 1.7 percent for the week. Soybean oil lost 0.7 percent to 7,498 yuan, down 3.2 percent for the week. Palm oil lost 0.7 percent to 6,842 yuan, a drop of 2.8 percent for the week.

India surpassed China last year as the world’s biggest buyer of palm oil, data from Mumbai-based Solvent Extractors’ Association showed this week.

To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net