Wednesday September 19, 2012
CPO tumbles to lowest level since October last year
PETALING JAYA: The coveted RM3,000 per tonne price level for palm oil may remain elusive until later in the year as supply concerns abate and on the likelihood that production will be higher this month.
The commodity reached a peak of RM3,612.34 in mid-April but crude palm oil (CPO) futures for third month delivery tumbled yesterday to its lowest since October last year.
The December-delivery contract fell to a day-low of RM2,827 per tonne before rebounding at the close to RM2,861 per tonne for a 4.19% decline over Friday. Markets were closed yesterday for the Malaysia Day celebration.
Kenanga Research analyst Alan Lim told StarBiz the main reasons behind the steep decline in palm oil included better prospects for soybean oil, the slump in crude oil prices and expectations of higher palm oil inventory in September.
Soybean dwindled 4% in Chicago on Monday after reports said there would be additional rain over Brazil’s soybean-growing regions, alleviating worries about a supply crunch for edible oils.
“Month-on-month production of palm oil is set to normalise this month as September has more working days than August,” Lim said.
On whether palm oil prices would continue to be pressured, Lim said he saw the commodity trading at a discount to soybean, although it should see a reprieve from November as demand picked up.