Palm Oil Poised for 4th Monthly Drop This Year on Supply Gains

Sept. 30 (Bloomberg) -- Palm oil was little changed, heading for its fourth monthly drop this year, amid falling exports and the prospect of a record crop of rival soybean.

The tropical oil has lost 11 percent this month as sales from Malaysia, the second-largest producer, fell 7.8 percent in the first 30 days of this month to 1.23 million tons compared with 1.33 million tons in the same period in August, Intertek, an independent surveyor, said today.

“The fundamentals aren’t looking great for palm oil at the moment,” Wang Aihua, an analyst at Orient Securities Futures in Shanghai, said. “We may see a lift if crude oil moves higher.”

Palm oil for December delivery traded unchanged at 2,102 ringgit ($605) a metric ton on the Malaysia Derivatives Exchange at 12:22 p.m. local time. Futures gained 0.8 percent earlier.

November-delivery soybean oil was little changed at 33.83 cents a pound in after-hours trading on the Chicago Board of Trade at the same time. The contract rose 0.7 percent yesterday.

An overnight freeze in parts of the U.S. Midwest caused little crop damage as farmers hasten the pace of harvesting before rains arrive later this week. An estimated 63 percent of the crop was beginning to drop leaves as of Sept. 27, a sign of maturity before the harvest, compared with 40 percent a week ago, the U.S. Department of Agriculture said yesterday. About 5 percent was harvested, compared with a five-year average of 18 percent, the agency said.

Output of soybeans in the U.S., the world’s largest grower and exporter, will reach a record 3.245 billion bushels this year, the U.S. Department of Agriculture estimated on Sept. 11.

Crude oil was up 0.9 percent at $67.33 a barrel at 12:23 p.m. in Malaysia. Palm oil and its substitute soybean oil often track crude oil as they are used as feedstock for biofuels.