Palm oil dropped on speculation that stockpiles in Malaysia will hold near a record as an export tax curbs demand and on concern that a levy on Cyprus’s bank deposits may throw Europe back into crisis.
The contract for May delivery, with the most open interest, declined as much as 0.8 percent to 2,395 ringgit ($765) a metric ton on the Malaysia Derivatives Exchange, and ended the morning session at 2,399 ringgit in Kuala Lumpur. The June contract, with the highest volume, fell 0.7 percent to 2,399 ringgit.
Commodities measured by the Standard & Poor’s GSCI Index fell as much as 1 percent today after Euro finance ministers agreed to force depositors in Cypriot banks to share the cost of a bailout. While Cyprus accounts for less than half a percent of the euro economy, the concern is that the one-time tax may trigger bank runs across Europe.
“Prices are likely to show weakness on Cyprus fears,” Ker Chung Yang, an analyst at Phillip Futures Pte., said today by phone from Singapore. “Crude palm oil prices are likely to track the overall market at least for this coming week.”
Malaysia’s exports may be unchanged in March after the government retained a 4.5 percent tax for a second month in April, Ker said. Shipments fell 14 percent to 1.4 million tons in February, according to the Malaysian Palm Oil Board. While inventories dropped to 2.44 million tons, they were near an all- time high of 2.63 million tons reached in December.
Soybean oil for May delivery lost 0.7 percent to 49.58 cents a pound on the Chicago Board of Trade, while soybeans declined 0.9 percent to $14.1275 a bushel. Refined palm oil for September fell 1 percent to 6,300 yuan ($1,013) a ton on the Dalian Commodity Exchange. Soybean oil retreated 1 percent to 8,054 yuan a ton.
To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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