CPO tumbles to lowest level since October last year

PETALING JAYA: The coveted RM3,000 per tonne price level for palm
oil may remain elusive until later in the year as supply concerns abate
and on the likelihood that production will be higher this month.
The
commodity reached a peak of RM3,612.34 in mid-April but crude palm oil
(CPO) futures for third month delivery tumbled yesterday to its lowest
since October last year.
The December-delivery contract fell to
a day-low of RM2,827 per tonne before rebounding at the close to
RM2,861 per tonne for a 4.19% decline over Friday. Markets were closed
yesterday for the Malaysia Day celebration.
The drop also precipitated losses in several plantation stocks such as Kuala Lumpur Kepong Bhd and Sarawak Oil Palms Bhd, which slipped 12 sen and 10 sen respectively to RM22.24 and RM6.60.
Kuala Lumpur Kepong was more heavily traded with 1.93 million shares changing hands while Sarawak Oil Palms saw 4,000 transactions.
Kenanga Research analyst Alan Lim told StarBiz
the main reasons behind the steep decline in palm oil included better
prospects for soybean oil, the slump in crude oil prices and
expectations of higher palm oil inventory in September.
Soybean
dwindled 4% in Chicago on Monday after reports said there would be
additional rain over Brazil’s soybean-growing regions, alleviating
worries about a supply crunch for edible oils.
“Month-on-month production of palm oil is set to normalise this month as September has more working days than August,” Lim said.
On
whether palm oil prices would continue to be pressured, Lim said he saw
the commodity trading at a discount to soybean, although it should see
a reprieve from November as demand picked up.