Palm Oil Price Drops

Palm futures tumble as crude falls

June 18th, 2009

Business Times

Thursday - June 18, 2009

CPO FUTURES

Palm oil futures yesterday declined as crude oil dropped, curbing the demand outlook for use of vegetable oils in alternative fuels.

The tropical commodity tumbled after gaining as much as 0.6 per cent earlier. Crude oil at more than US$72 a barrel supported palm oil between RM2,460 and RM2,500 a metric ton, CIMB Futures trader S Chandran said by phone.

“When crude oil stopped rising above US$72 and started stabilising between US$70 and US$72, crude palm oil had no additional support to push higher above a price of 2,500,” he said from Kuala Lumpur.

Palm oil for September delivery dropped as much as 1.4 per cent to RM2,366 a ton on the Malaysia Derivatives Exchange and traded at RM2,370 at 5.08 pm.

Crude oil for July delivery in New York fell 0.4 per cent to US$70.20 a barrel as of 5.06 pm Singapore time after earlier rising to US$71.28. The contract touched US$72.77 on Tuesday.

Rising palm oil supplies are also weighing on the price, Chandran said.

Stockpiles in Malaysia, the world’s second- largest producer, increased 5.7 per cent to 1.37 million tons in May from a month earlier, as output expanded and exports declined, the Malaysian Palm Oil Board said June 10.

“This month onwards, the production is going to keep rising, demand has slowed down a bit, anticipating the stocks to keep building up in the next two months until September,” he said.

Palm oil was likely to move to less than RM2,300 in the “near term,” Chandran said.