Palm oil production in Malaysia gained for a sixth month in August, while stockpiles in the world’s second-largest producer missed analysts’ expectations, staying near a two-year low, official data showed.
Palm oil fell the most in more than six weeks on speculation that production in Malaysia may expand after gaining for a sixth month in August and as weakening crude oil prices cut the appeal of vegetable oils as biofuel.
Palm oil will drop “significantly” in the fourth quarter as output from new trees in Indonesia, the biggest grower, surpasses estimates and buyers switch to soybean oil, DBS Vickers Securities (Singapore) Pte. said.
Palm oil inventories in Malaysia, the largest producer after Indonesia, probably contracted for a sixth month in June to the lowest level in a year, according to a Bloomberg survey of growers and analysts. Futures climbed.
Dorab Mistry compared the palm-oil market in 1998 to the Titanic and correctly predicted a slump from then-record prices the next year. He’s now forecasting another retreat as weakening demand outweighs a decline in Malaysian production.
Wilmar International Ltd., the world’s biggest palm-oil processing company, fell the most in Singapore trading in more than three years after reporting quarterly profit that missed analysts’ estimates.
Palm oil probably will drop this year after Asian producers boosted acreage and global oilseed supplies rose, said Dorab Mistry, a Godrej International Ltd. director who’s traded the commodity for more than 30 years. Prices fell, erasing this year’s gain.