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Palm oil declines to lowest level in six weeks

Palm oil declined to the lowest level in six weeks on speculation that inventories in Malaysia
 

Manila: 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 0.8 per cent to 3,169 ringgit (Dh3,797) a metric tonne on the Malaysia Derivatives Exchange on Friday, the lowest level since May 6, and was at 3,172 ringgit in Kuala Lumpur. Futures lost 2.1 per cent last week, set for a third weekly drop.

"Stockpiles could exceed two million tonnes, 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 in Kuala Lumpur.

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

Output expands

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

Palm oil prices have shed 20 per cent from a 35-month high of 3,967 ringgit a tonne on February 10 on prospects for increased supplies from Indonesia and Malaysia, the largest producers, due to favourable weather.

Palm oil also dropped on, "improving soybean-supply prospects," Tan said.

 

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