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Palm Oil Drops to Six-Week Low on Malaysian Inventory Outlook

 

Palm oil declined to the lowest level in six weeks on speculation that inventories in Malaysia, the second-largest grower, may expand from the highest level in 16 months as production accelerates.

The September-delivery contract declined as much as 0.3 percent to 3,185 ringgit ($1,045) a metric ton on the Malaysia Derivatives Exchange, the lowest level since May 6, and ended the morning session little changed at 3,196 ringgit in Kuala Lumpur. Futures have lost 1.5 percent this week, set for a third weekly drop.

“Stockpiles could exceed 2 million tons, especially if we have the similar kind of statistics that May had -- strong production and sort of sluggish exports,” Arhnue Tan, senior investment analyst at ECM Libra Capital Sdn., said by phone from Kuala Lumpur.

“The high production season is only in the third quarter but it seems to be recovering pretty swiftly.”

Output of the cooking oil in Malaysia expanded 13.7 percent to 1.74 million tons last month, the highest level in 19 months while stockpiles surged 14.8 percent to 1.92 million tons, the highest level since January 2010, the nation’s palm oil board said on June 10. Shipments gained 4.3 percent to 1.4 million tons, less than the 8.9 percent increase in April, it said.

Palm oil prices have shed 20 percent from a 35-month high of 3,967 ringgit a ton on Feb. 10 on prospects for increased supplies from Indonesia and Malaysia, the largest producers, due to favorable weather.

November-delivery soybeans fell as much as 0.3 percent to $13.465 per bushel in Chicago, while soybean oil for December delivery slid 0.2 percent to 57.51 cents a pound.

January-delivery palm oil on the Dalian Commodity Exchange dropped as much as 0.7 percent to 9,040 yuan ($1,398) a ton. Soybean oil for delivery in the same month fell as much as 0.7 percent to 10,150 yuan a ton.

 

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