Palm Oil Futures Decline on Concerns Recent Rally Was Overdone
By Feiwen Rong
April 17 (Bloomberg) -- Palm
oil futures declined as some investors sold the commodity on concerns that the
rally to the highest in more than eight years yesterday was overdone.
Palm oil futures rose 7.2 percent in the two weeks before today as
Malaysia, the world's largest producer of the tropical oil, reported
unexpectedly strong growth in exports this month.
``Some investors are taking profit this morning because the rally was
too fast,'' said Stefanus Darmagiri, an analyst at UOB Kay Hian Securities in
Jakarta.
Malaysia may have exported 642,492 tons to 666,793 tons of palm oil in
April 1-15 period, according to estimates from two independent cargo surveyors.
That's an increase of as much as 47 percent from the year-earlier month.
Palm oil for July delivery, the most active contract, fell as much as
31 ringgit, or 1.4 percent, to 2,219 ringgit ($646) a ton on the Malaysia
Derivatives Exchange. Yesterday, the most active contract for June delivery
peaked at 2,307 ringgit, the highest since Dec. 1, 1998, when it touched 2,311
ringgit.
Palm oil futures also fell because prices of the competing vegetable
oil made from soybeans declined yesterday, reducing appeal of the cheaper palm
oil.
Soybean oil for July delivery was little changed at 33.37 cents a
pound at 11:35 a.m. Singapore time. Soybean oil futures have gained 34 percent
in the past six months, while palm oil has soared 42 percent.
Indonesia and Malaysia, the world's biggest producer of the palm oil,
account for about 85 percent of production worldwide.
To contact the reporter on this story: Feiwen Rong in Singapore at
[EMAIL PROTECTED]
Last Updated: April 17, 2007 00:15 EDT
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