Jakarta: Palm oil futures in Malaysia, the industry benchmark, closed lower for the first time in seven days on concern that record prices reached this week may dent demand in favour of other vegetable oils.
Higher prices may reduce the attraction of palm oil as a substitute for soya bean oil, especially in China and India, the biggest importers of both oils. It may also make palm oil less attractive in its use in new applications such as biofuels.
“It is too high already,” said Gaotama Setiawan, managing director at PT Salim Oil Grains in Jakarta. “It’s almost parity with soya bean oil. It’s not a good thing.”
Palm oil for August delivery, the most actively traded contract on the Malaysia Derivatives Exchange, fell 38 ringgit, or 1.5%, to 2,500 ringgit ($735) a tonne. It earlier dropped as much as 2.8%.
The contract reached a record 2,590 ringgit a tonne on Tuesday, equivalent to 34.52 cents a pound, just 1.9% lower than soya bean oil, which closed at 35.18 cents. Palm oil is the world’s most consumed vegetable oil, followed by soya bean oil.