Palm oil futures plunged to a 19-month low, mirroring a slump in commodities, on concern demand for vegetable oils may wane after US lawmakers rejected a US$700 billion bank bailout plan to rescue the financial system.
December delivery palm oil declined as much as 6.5 per cent to RM1,988 (US$575) a metric ton on the Malaysia Derivatives Exchange and traded at RM2,018 at 11.22am. That’s the first time since March 26, 2007, that the commodity has dropped below RM2,000.
The Reuters/Jefferies CRB Index of 19 commodities fell by the most in more than 50 years yesterday as a worsening global growth outlook sent prices for oil, corn, soybeans, nickel and gold tumbling from records reached earlier this year.
“Demand risk has emerged, especially if China’s and India’s economies falter with the global crisis,” said Simone Yeoh, an analyst with JPMorgan in Kuala Lumpur. The brokerage pared its price forecast 12 per cent to RM3,000 a ton for 2008, and 31 per cent to RM2,200 a ton for 2009.
China and India, with more than 2.5 billion consumers, are the world’s largest consumers of palm oil.
Vegetable oils made from soybeans, corn, rapeseeds and oil palms, used mostly in cooking, often track crude oil prices as they can be used to make alternative fuels. Oil futures in New York slumped 9.8 per cent to US$96.37 a barrel yesterday on the outlook for demand dropping with slower world economic growth.
Stocks of plantation companies and edible-oil refiners fell. Wilmar International Ltd, the world’s biggest palm oil trader which supplies almost half of China’s edible oils, plunged as much as 9.6 per cent to S$2.26 in Singapore, the most since January 22.
Golden Agri Resources Ltd, owner of the world’s second-largest oil-palm plantation, plunged as much as 15 per cent to 28.5 Singapore cents, and was at 31.5 cent at 10.43am on the Singapore exchange. – Bloomberg
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