Palm Oil Declines on Crude, South American Soybean Crop Concern

March 15 (Bloomberg) -- Palm oil dropped for a third day to the lowest level in almost two weeks as crude oil fell and on concerns record soybean supplies from South America will reduce the need for substitutes.

May-delivery futures lost as much as 1.8 percent to 2,601 ringgit ($784) a metric ton on the Malaysia Derivatives Exchange, the lowest level since March 2, and traded at 2,606 ringgit at 4:37 p.m. Crude for April delivery was down 0.5 percent at $80.87 a barrel in New York.

“A slight pullback could be under way this week” for crude oil, and with palm oil failing to advance beyond 2,726 ringgit last week, “follow-through selling can be expected,” a technical report by RHB Research Institute Sdn. said today.

Soybeans for May delivery dropped as much as 0.4 percent to $9.2175 a bushel in Chicago and traded at $9.2550 at 5 p.m. Singapore time. Prices may drop below $9 a bushel as China, the world’s biggest importer, switches more cargoes from the U.S. to South America, according to a Bloomberg survey on March 12.

Brazil’s soybean processors raised their crop forecast for the current marketing year to 67.6 million metric tons. The outlook for output in the year that started Feb. 1 was raised from 65.2 million tons estimated on Jan. 26, Abiove, as the association is known, said March 12.

Malaysian Exports

Exports from Malaysia, the second-largest producer, climbed 18 percent in the first 15 days of March to 669,227 tons, independent market surveyor Intertek said. Shipments to China surged by 29 percent to 191,059 tons, and to India and the subcontinent by 25 percent to 165,456 tons, Intertek said.

Overall exports gained 5.1 percent to 638,548 tons in the period, according to Societe Generale de Surveillance.

India imported 2.39 million tons in the four months ended February, up from 2.33 million tons a year earlier, according to data from the Solvent Extractors’ Association of India today.

Inbound shipments of vegetable oils may reach a record 9.1 million tons in the year ending Oct. 31, up from 8.66 million tons a year ago, a processor’s group said on March 12. The purchases will include 7 million tons of palm oil-products, said BV Mehta, co-chairman of the crop committee of the Central Organization for Oil Industry & Trade.

In China, the largest edible oils user, September-delivery palm oil dropped 1 percent to 6,848 yuan a ton on the Dalian Commodity Exchange while soybeans lost 0.4 percent to 3,800 yuan.