Palm oil futures in Malaysia, the benchmark for the commodity, fell on concerns higher production in the second half may cool a rally in prices. |
Palm oil for October delivery on the Malaysia Derivatives Exchange dropped as much as 30 ringgit, or 1.4 per cent, to 2,472 ringgit a tonne, the lowest intra-day price in two weeks. It closed at 2,479 ringgit at the end of the morning session. |
|
Output of palm oil in Malaysia and Indonesia, which account for 90 per cent of the world production and exports of the commodity, typically peaks between July and September. Malaysian companies produced 54 per cent of last year's volume in the second half, data from the Malaysian Palm Oil Board shows. |
|
"Due to seasonality, production picks up in the second half,'' said Teddy Oetomo, an analyst at Credit Suisse group in Jakarta. Palm oil may average 2,200 ringgit this year, he said. |
|
The price of palm oil reached a record on June 6, driven by increased use of vegetable oils as fuel additives, after crude oil prices tripled to $61.05 a barrel in the five years ended 2006. Palm oil has averaged 2,201 ringgit this year, 51 per cent higher compared with a year earlier, according to Bloomberg data. |
|
Malaysia's palm oil exports fell 15 per cent last month to 1,007,424 metric tonnes from 1,184,606 tonnes in May, as record prices deterred buyers, Societe Generale de Surveillance, an independent cargo surveyor, estimated on July 2. |
|
Malaysia's exports and inventory levels are monitored as an industry benchmark. |
|
Indonesia doesn't announce monthly data. |
|
|
|