Palm Oil Drops as Rain Set to Help Drought-Hit US Soybean Crop
Palm oil declined on speculation that rain in the US Midwest may help soybean crops that have been hit by the worst drought in more than 50 years, reducing concern that global oilseed supplies will drop.
The October-delivery contract fell as much as 1 percent to 2,922 ringgit ($923) a metric ton on the Malaysia Derivatives Exchange, and ended the morning session at 2,935 ringgit in Kuala Lumpur. Futures are poised for a third weekly decline.
The National Weather Service said flood advisories were in force in North Dakota and Minnesota. Rain may also fall across a larger area including Iowa and Illinois, said Joel Widenor, of Commodity Weather Group LLC. Iowa and Illinois are the two largest soybean growers. Soybeans lost as much as 2.1 percent.
“Reports of rain sweeping across the Midwest of the US have eased soybean prices mildly, but the rain spell is not expected to be sufficient for the drought-stricken crop,” analysts at Alliance Investment Bank Bhd. wrote in a report.
December-delivery soybean oil fell 0.8 percent to 52.57 cents a pound on the Chicago Board of Trade. Most-active soybeans, which have rallied 32 percent this year and touched a record on July 23, traded 1.4 percent lower at $15.9225 a bushel.
Weakening demand for palm oil may outweigh a drop in Malaysian production, according to Dorab Mistry, director of Godrej International Ltd. Prices may decline to 2,700 ringgit by year-end unless the US does more to stimulate growth and boost demand, Mistry said in an interview published today.
Palm oil for January delivery gained 0.2 percent to 7,666 yuan ($1,200) a ton on the Dalian Commodity Exchange. Soybean oil for the same month was little changed at 9,338 yuan a ton.
China’s palm-oil imports in the year through Sept. 30 may rise 1.5 percent to 5.8 million tons from a year ago, state- owned researcher Grain.gov.cn said today.