Business

Thursday September 24, 2009

Palm oil weighed down by soybean supply outlook


SINGAPORE: Palm oil fell the most in five days as the prospect of a record US soybean crop reduced concern over a shortage in global edible oil supplies.

“It looks to be another negative for the month of September,” ECM Libra Investment Research said yesterday, referring to palm oil.

“Looking into the soybean market, things were relatively flattish as well. The ‘record crop’ in the United States continues to weigh down on prices.”

December-delivery palm oil fell 2% to RM2,146 a tonne on the Malaysia Derivatives Exchange. Concern over a global oilseeds shortfall helped lift palm oil prices 28% this year.

Soy oil, a key substitute, gained 3% on the Chicago Board of Trade in the period, according to Bloomberg data. Soy oil is 23% more expensive than palm oil, according to the data.

On Sept 11, the US Department of Agriculture said the country’s soybean harvest would be the biggest ever after August rains and mild temperatures during the growing season boosted crop development.

The US soybean crop will be harvested as palm oil output peaks. Palm oil production typically grows in the third quarter and 55% of annual production is harvested in the second half of the year.

Output in Malaysia was the second-highest on record last month at 1.49 million tonnes, helping stockpiles jump to a six-month high.

US farmers planted a record soybean crop after drought this year damaged crops in Argentina and Brazil, the second- and third-largest producers after the United States.

Soybean production in India, Asia’s biggest exporter of soy meal, might climb 12% next year, Atul Chaturvedi, president at Adani Enterprises Ltd, the nation’s biggest trader of farm goods, said yesterday.

Farmers planted more acres with the oilseed after the main growing areas escaped a drought, he said.

Output might be as much as 10 million tonnes in the harvesting season starting Oct 1, compared with 8.9 million tonnes this year, Chaturvedi added. — Bloomberg

  • E-mail this story
  • Print this story