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Import slowdown fears hit palm oil
(China Daily/Agencies)
Updated: 2010-01-27 08:02
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Palm oil dropped to the lowest in two months on concern demand from China, the biggest consumer of edible oils, may slow even as crude oil and soybeans declined.
April-delivery futures fell 2.5 percent to 2,407 ringgit ($703) a metric ton on the Malaysia Derivatives Exchange, the lowest close since Nov 19.
China's imports of the tropical oil may reach 289,000 tons this month and decline to 176,000 tons in February, the National Grain & Oils Information Center said yesterday.
"There is a risk that Chinese imports could slow in coming months," said Sunaina Dhanuka, an analyst with Macquarie Group Ltd. Palm oil may average 2,500 ringgit this year, she said.
Crude oil for March delivery extended losses in late Asian trading, dropping as much as 1.5 percent to $74.14 a barrel amid concerns about the pace of the global economic recovery.
Palm oil sales from Malaysia, the second-largest producer, slumped 20 percent in December to 1.21 million tons, increasing stockpiles to 2.24 million tons, the second-highest on record, the country's palm oil board said on Jan 11.
"Beyond the first quarter of 2010, crude palm oil prices could be pressured by the seasonal increase in production and the weakness from the soy complex following the South American harvest," Macquarie's Dhanuka said.
World soybean production in the crop year that began Oct 1 will be a record 253.4 million tons, up from 210.9 million last year, the US Department of Agriculture said on Jan 12.
Soybeans for March delivery in Chicago lost 0.5 percent to $9.36 a bushel at 6:02 pm Singapore time. It lost 9.3 percent in the previous three weeks. Soybean oil for March delivery lost 0.7 percent to 36.23 cents a pound at 6:04 pm in Singapore. It declined 10 percent in the previous three weeks.
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"The price discount between crude palm oil and soy oil has narrowed substantially," which signals more "downside" to palm oil, said Dhanuka.
On the Dalian Commodity Exchange, soybeans for delivery in September dropped 0.56 percent to 3,885 yuan a ton yesterday. Soybean oil lost 1.37 percent to 7,334 yuan and palm oil fell 1.82 percent to 6,706 yuan at the close.
