Palm oil dropped for a second day as crude oil tumbled to a three-month low yesterday, reducing the appeal of vegetable oils as feedstock for biofuels.
The contract for delivery in January lost as much as 0.8 percent to 2,378 ringgit ($754) a metric ton on the Bursa Malaysia Derivatives and was at 2,394 ringgit at 4:34 p.m. in Kuala Lumpur, paring a second weekly advance to 0.6 percent for futures. Palm for physical delivery in November was at 2,400 ringgit, data compiled by Bloomberg show.
West Texas Intermediate for November delivery dropped to $100.67 a barrel yesterday, the lowest price at close since July 2, after an industry group reported an increase in inventories last week and as more Americans than forecast filed applications for unemployment benefits. Futures were little changed today. About 6.34 million tons of palm oil will probably be processed into fuel this year, according to industry researcher Oil World.
“The weaker crude oil price will dampen the biodiesel prospect somewhat,” said Alvin Tai, an analyst at RHB Investment Bank Bhd.
Losses were capped on speculation that stockpiles in Malaysia will not reach the record high levels seen last year, Tai said. Inventories may peak at 2 million tons to 2.1 million tons, he said. Reserves dropped 32 percent to 1.78 million tons last month from a record 2.63 million tons in December, data from the Malaysian Palm Oil Board shows.
Soybeans for delivery in November gained 0.2 percent to $12.9525 a bushel on the Chicago Board of Trade, while soybean oil for December climbed 0.5 percent to 41.33 cents a pound.
Refined palm oil for May delivery advanced 0.8 percent to close at 6,020 yuan ($988) a ton on the Dalian Commodity Exchange and soybean oil for delivery in the same month ended little changed at 7,168 yuan a ton.
