Palm oil futures had a second weekly loss yesterday as output grew faster than exports in Malaysia, the second- biggest producer, expanding the country’s stockpiles by 2.5 per cent in June.
Production climbed 3.6 per cent 1.446 million metric tons in June, pushing inventories to 1.41 million tons from 1.37 million tons in May, according to Malaysian Palm Oil Board data released today. Exports climbed 3.1 percent to 1.27 million tons.
“It’s no secret that we’re entering the higher production period,” Carey Wong, an analyst at OCBC Investment Research, said by phone from Singapore yesterday.
“The big unknown is the demand.”
Palm oil for September delivery dropped 1.8 per cent to RM2,010 a metric ton on the Malaysia Derivatives Exchange, after losing as much as 2.2 per cent. The most-active contract lost 7.6 per cent this week, extending last week’s 6.2 per cent drop.
Malaysia’s palm oil exports from July 1 to 10 increased to 419,100 tons, up from 289,437 tons over the same period in June, independent surveyor Intertek said yesterday.
Declining crude oil prices may limit any gains, as lower oil prices reduce demand for biofuels made from vegetable oils and increase concern that palm oil output will outpace consumption, Wong said.
Crude oil for August delivery slipped as much as 1.5 per cent to US$59.52 a barrel in New York.
Pam oil futures may drop as much as 15 per cent in the coming months as Indonesia and Malaysia, the biggest producers, enter the peak output season, Dinesh Shahra, managing director of Mumbai-based Ruchi Soya Industries Ltd., said July 3.
Third- quarter output is typically the highest every year, Ivy Ng, a plantation analyst at CIMB Investment Bank Bhd said July 3.
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