Palm Oil Futures Drop as Investors Cash in on Recent Gains

July 16 (Bloomberg) -- Palm oil futures in Malaysia fell as investors cashed in on yesterday’s gains and crude oil and soybean oil declined.

Palm oil futures jumped 3.3 percent yesterday, extending a 2.3 percent gain a day earlier, as exports from Malaysia, the world’s second-largest producer, rose 18 percent in the first half of the month, boosting optimism demand from overseas buyers is picking up.

“We’re seeing profit-taking,” Donny Khor, floor manager at OSK Futures & Options Sdn. Bhd. in Kuala Lumpur, said today by phone. Palm oil prices were also “affected by external market factors,” he said. Soybean oil and palm oil can be processed to make cooking oil or biodiesel.

Palm oil for September delivery lost as much as 1.4 percent to 2,073 ringgit ($581) a metric ton on the Malaysia Derivatives Exchange, and traded at 2,087 ringgit a ton at 11:38 a.m. local time.

Soybean oil for December delivery lost as much as 1 percent to 34.42 cents a pound in after-hours electronic trading on the Chicago Board of Trade, after closing 1 percent higher yesterday. It traded at 34.52 cents a pound, down 0.8 percent at 11:31 a.m. Singapore time.

Soybean oil fell on concern supply of the oilseed may rise as yields in the U.S., the world’s biggest grower and exporter, are forecast to gain.

Soy Yields

Soybean yields will rise to 43 bushels an acre this year, from 39.6 bushels an acre last year, AIR Worldwide Corp., a catastrophe-risk modeling firm in Boston said yesterday. That compares with the 42.6 bushels forecast by USDA in its July 10 report.

Crude oil for August delivery was little changed at $61.56 a barrel in New York at 11:49 a.m. Singapore time, after losing as much as 0.4 percent earlier.

Still faster economic growth in China, the world’s biggest consumer of edible oils, may cap declines in palm oil prices, Khor said.

The gross domestic product of China expanded 7.9 percent in the second quarter from a year earlier, after a 6.1 percent gain in the previous three months, the statistics bureau said in Beijing today. That’s more than the 7.8 percent median estimate of 20 economists surveyed by Bloomberg News.

“That will certainly induce consumption,” Khor said.