(Bloomberg) -- Palm oil retreated from its highest close in six months as a drop in the prices of crude and soybean oil reduce the appeal of biofuels.
Crude fell after China’s highly anticipated Finance Ministry briefing on Saturday lacked new stimulus to boost consumption in the biggest importer. Declining crude prices tend to diminish the incentive to process vegetable oils into fuel.
The tropical oil was also dragged lower by the weakness in prices of soybean oil, said Anilkumar Bagani, head of research at Mumbai-based Sunvin Group. Chicago-traded soybean oil futures fell as much as 1.9% early on Monday, and China’s vegetable oil contracts also declined. Some traders were taking profits in the absence of follow-up demand after palm oil’s rally on Friday, he said.
Still, palm oil’s fundamentals are strong, with rising exports and signs of weaker production in second-largest grower Malaysia. Exports from the Southeast Asian nation jumped more than 13% in the first 10 days of October from a month earlier, according to data released by cargo surveyor Intertek Testing Services.
Meanwhile, output in the nation’s southern peninsula dropped 6.5% during the first 10 days of this month, compared with the same period in September, Bagani said, citing figures from from the Southern Peninsular Palm Oil Millers Association.
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