Palm Oil Drops as Slower Growth in China Seen Hurting Demand
Workers load palm fruits onto a truck at a plantation in the Luwu district of Indonesia's South Sulawesi province in this August 11, 2009 file photo. (Reuters Photo/Yusuf Ahmad/Files)
Palm oil fell to the lowest level in more than a week after China's leadership indicated that it chose slower economic growth, boosting concern that demand from the second-largest consumer may be hurt.
Palm for November delivery retreated as much as 1 percent to 2,392 ringgit ($725) a metric ton on the Bursa Malaysia Derivatives, the lowest level for the most active contract since Aug. 23, and ended the morning session at 2,414 ringgit in Kuala Lumpur. Palm for physical delivery in September was at 2,440 ringgit, data compiled by Bloomberg show.
President Xi Jinping said that the government opted for slower growth this year to allow it to adjust the structure of the economy, according to a transcript of a written interview distributed by the official Xinhua News Agency. Growth was 7.5 percent in the second quarter, extending the longest streak of sub-8 percent expansion in at least two decades and putting the government at risk of missing its 2013 goal of 7.5 percent.
"If China slows down for longer than expected, then palm oil demand may also be affected," said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank. "In the short term, the Mid-Autumn Festival will boost demand temporarily."
Exports to China from Malaysia gained 15 percent to 2.07 million tons in the first seven months of this year from the same period in 2012, according to data from the nation's palm oil board. Malaysia is the largest producer after Indonesia.
Refined palm oil for January delivery lost 0.8 percent to 5,580 yuan ($912) a ton on the Dalian Commodity Exchange. Soybean oil fell 1.2 percent to 7,198 yuan a ton. China's markets will be closed on Sept. 19 and 20 to celebrate the Mid-Autumn Festival.
Soybeans for November delivery dropped 1 percent to $13.7325 a bushel on the Chicago Board of Trade. Soybean oil for delivery in December lost 0.5 percent to 43.96 cents a pound.
Bloomberg
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