KUALA LUMPUR, Oct 28 — Palm oil fell for a third day after Malaysia, the second-largest producer, estimated its output would reach a record and the country’s currency rose to a four- month high, reducing the appeal of ringgit-denominated futures.
The contract for delivery in January slid as much as 0.7 per cent to RM2,426 (US$774) a metric tonne on the Bursa Malaysia Derivatives, and was at RM2,438 at the midday break in Kuala Lumpur. Palm for physical delivery in November was at RM2,450, data compiled by Bloomberg show.
Production will probably expand 3.3 per cent to 19.4 million tonnes this year as yields increase, more trees begin production and oil extraction rates improve, Malaysia’s finance ministry said October 25 in its Economic Report for 2013-2014. The ringgit was at the strongest level against the dollar since June, after the government laid out plans to cut the fiscal deficit in the 2014 budget announced October 25.
“When the ringgit is higher, palm becomes expensive for importers like India and China,” said Prathamesh Mallya, an analyst at AnandRathi Commodities Ltd. Weather conditions indicate that the government’s production forecast is achievable and that would be “bearish for prices,” he said by phone from Mumbai. India and China are the world’s largest consumers.
Refined palm oil for May delivery was little changed at 6,078 yuan (RM3,135.50) a tonne on the Dalian Commodity Exchange and soybean oil was also little changed at 7,130 yuan.
Soybeans for delivery in January fell 0.4 per cent to US$12.8825 (RM40.40) a bushel on the Chicago Board of Trade, while soybean oil for December gained 0.3 per cent to 40.85 cents a pound. —Bloomberg
