Palm Oil May Tumble on Increasing Global Supplies, Mistry Says

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By Ranjeetha Pakiam & Swansy Afonso - Sep 22, 2013 4:22 PM GMT+0800

Palm, the world’s most-used cooking oil, may slump to the lowest level since 2009 by January as global supplies of edible oils expand and crude oil weakens, said Dorab Mistry, director at Godrej International Ltd.

Futures will probably retreat to 2,000 ringgit ($629) a metric ton in Kuala Lumpur if Brazil and Argentina, the largest soybean growers after the U.S., harvest bigger crops and Brent crude drops below $100 a barrel, Mistry told an industry conference in Mumbai today. Prices will not fall below 2,200 ringgit in the next few weeks and will trade between 2,200 and 2,400 ringgit, he said.

Palm, used in everything from candy to detergents, is poised for a third annual loss, the worst run since at least 1996, according to data compiled by Bloomberg. Lower cooking oil prices may help extend a drop in global food costs measured by the United Nations to the lowest in more than a year. World palm stockpiles will surge 17 percent to a record 9.2 million tons by the end of 2013-2014 as demand expands 4.5 percent, the least in 12 years, the U.S. Department of Agriculture estimates.

“The fundamentals of the oilseed and vegetable oils complex are clearly bearish,” said Mistry, who has traded vegetable oils for more than three decades. “We cannot expect a bull market in vegetable oil prices any time in 2013-2014 unless we have adverse weather.”

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