Singapore/ Mumbai: Palm oil declined, heading for the first weekly drop in four, as orders from China and India, the world’s largest buyers of vegetable oils, fell.
Chinese orders dropped 68% to 62,250 tonnes in the first 15 days of January, against the same period in December, independent cargo surveyor Intertek said on Thursday. Indian purchases dropped 5.8% to 200,553 tonnes from a month ago, Intertek data showed.
“Prices have gained a lot since December and buyers are quite price sensitive at this point,” Alvin Tai, an analyst at OSK Research Sdn, said over the phone from Kuala Lumpur. “They won’t be stepping over themselves to buy at these levels. It has to go below 1,600 ringgit (Rs22,432) to draw buying.”
March delivery futures fell 78 ringgit, or 4.1%, to 1,806 ringgit a tonne on the Malaysia Derivatives Exchange in Kuala Lumpur, the lowest since 2 January. Futures had climbed 25% in the three weeks ended 9 January.
Malaysian exports have fallen 33% in the first 15 days of January to 578,282 tonnes from the same period in the previous month, Intertek said. Overseas sales slumped 35% to 570,602 tonnes during the same period, Societe Generale de Surveillance (SGS), another surveyor said.
“Indian imports will slow in the coming months as there were huge purchases in the earlier quarter,” said B.V. Mehta, executive director of Mumbai-based Solvent Extractors’ Association (SEA).
Indian edible oils supply exceeds demand after imports climbed 80% in the three months ended 31 December, data compiled by SEA showed. Palm oil makes up 90% of the total. India’s cooking oil imports rose to 2 million tonnes (mt) in the December quarter from a year earlier as a 53% drop in palm oil prices in the second half of 2008 attracted buyers, SEA said.
Malaysian sales of palm oil to India last month more than doubled to 245,280 tonnes, lifting total exports to a record 1.64mt, according to SGS.
Malaysia’s monthly output, export and stockpiles data are a benchmark for the industry, which is dominated by Indonesia and Malaysia.
Indonesia does not release data.