March 15, 2017 11:39 pm JST

Palm oil price falling as Southeast Asian supply recovers

Prices slide more than 10% from recent high

TOKYO -- The international price of palm oil has been dropping notably, due to prospects of abundant supply from Southeast Asia and the declining prices of a substitute, soy oil.

Palm oil is used in margarine and for deep frying, among other purposes. Around 90% of the global output is produced in Malaysia and Indonesia.

The benchmark futures contracts in the Malaysian market have fallen 13% since a recent peak reached at the end of 2016, to around 2,750 ringgit ($618) per ton.

Unusual weather put the brakes on production last year. But output is seen rebounding to normal levels from this spring.

February output in Malaysia was around 1.26 million tons, up about 20% from a year earlier. March production is said to be rising even faster.

Lower prices of soy oil have also been weighing down palm oil prices. Thanks to abundant soy harvests in the main producers, the U.S. and South America, international prices of soy oil have fallen 6% since the beginning of March.

(Nikkei)

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