after a rally to the highest price in more than three months prompted
speculation that some buyers may be deferring purchases.
October-delivery futures fell 0.3 per cent to close at RM2,562
a
metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Prices
had gained 3.9 per cent in the five days to Monday’s close, which was
the highest since April 9.
“There’s a bit of profit-taking after
the recent rally and some buyers might be put off by the high prices,”
said Ivy Ng, an analyst at CIMB Investment Bank Bhd.
“Palm oil has been riding on the strength of external markets, like
crude oil and soybeans, and we may witness some volatility in coming
days.”
Palm oil has rebounded from a seven-month low on July 7 on
speculation demand may rise in Asian countries and as the La Nina
weather event may hurt output in the biggest producers.
China,
India, Pakistan and Indonesia mark festivals in the quarter ending
September 30, typically stoking edible-oils demand. Palm oil has also
risen with crude oil, soybeans and equities.
November-delivery
soybeans reached US$10.295 a bushel in intraday trade in Chicago Monday,
the highest level for a most-active contract since January 11, as
drought slashed grain output in Russia and parts of Europe. In July, the
oilseed jumped 11 per cent, the steepest monthly gain since May 2009.
Crude
oil traded near a three-month high today after breaching US$81 a barrel
for the first time since May as the outlook for the global economy
improved.
Oil for September delivery traded at US$81.17 a barrel at 5.25 pm Singapore time.
“Most
people expect palm oil production in Malaysia to be less than forecast
because of weather,” CIMB’s Ng said. “If production turns out to be
better, that will boost supplies and lead to a correction in prices.”
La
Nina, which causes higher-than-normal rainfall in Asia, can disrupt
palm oil production in Indonesia and Malaysia, the two top growers, and
cause dry weather in North America, hurting soybean crops. Palm and
soybean oils are substitutes and account for more than 60 per cent of
global edible oils supply.
Development of La Nina will be a
bullish factor for palm oil prices should the wet weather last until the
end of this year or early next year, Standard & Poor’s said in a
report Monday.
Palm oil may trade between RM2,400 and RM2,600 a
ton over the rest of the year because of good demand and low stockpiles,
it said.
December-delivery soybean oil fell as much as 1 per
cent to 40.77 cents a pound after jumping 1.5 per cent Monday. The
vegetable oil’s premium over palm oil rose to US$94.29 a ton from
US$93.88 yesterday, according to Bloomberg data.
CME Group Inc’s
October-delivery palm oil contract, pegged to the Malaysian benchmark
price, dropped 0.1 per cent to US$805.50 a ton.
On the Dalian
Commodity Exchange, January-delivery palm oil ended 0.1 per cent lower
at 6,900 yuan a ton, while soybean oil rose 0.1 per cent to 7,846 yuan a
ton.
