after data from Malaysia showed stockpiles of the edible oil climbed 16
per cent last month to the second- highest on record.
The contract for March delivery fell 1.1 per cent to RM2,556
a metric ton on the Malaysia Derivatives Exchange, the lowest close since December 24.
Increased stockpiles coincide with the harvesting of the South American
soybean crops next month, potentially lifting supplies of soybean oil,
a substitute to palm oil.
“With
edible oil supply normalizing this year, the world is well supplied,”
Alvin Tai, an analyst at OSK Research Sdn Bhd, said.
“Near-record palm oil inventory is testament to this.”
Farmers
in Brazil will produce 65.2 million metric tons of soybeans this year,
more than a December estimate of as much as 64.6 million tons, the
ministry’s Conab crop-forecasting agency said January 7.
Combined
with Argentina, output in the two nations will rise 30 per cent to a
record 116 million tons in 2010, US Department of Agriculture figures
show.
“Expectations are that the South American soybean supply
is set to rise sharply from 2009’s drought-induced level,” said Penny
Yaw, an analyst with Citigroup Inc in Kuala Lumpur.
“If confirmed, this could cause soybean oil prices to come off and hence potentially crude palm oil prices.”
Soybeans
traded in Chicago were little changed at US$10.095 at 5.38 pm. Soybean
oil was little changed at 39.49 cents. The commodity is US$108 a ton
costlier than palm oil. The premium has narrowed from a 12-month
average of US$157 a ton.
The tropical commodity may average
RM2,250 this year, higher than RM1,900 forecast earlier, “due to
stronger- than-expected demand resilience which is preventing palm oil
from slipping below RM2,000 per ton,” OSK’s Tai said. Palm oil averaged
RM2,233 in 2009.
In China, the biggest consumer of vegetable oils, Dalian soybeans for September delivery lost 0.7 per cent to 4,004 yuan
a ton, the lowest close since December 25.
Dalian soybean oil declined 1 per cent to 7,726 yuan, the lowest since December 25.
Source : Business Times
