BLBG: Palm Oil Gains From Three-Month Low as Crude, Soybeans Advance
By Claire Leow
May 20 (Bloomberg) -- Palm oil futures rose from the lowest level in more than three months as crude oil and soybeans advanced, lifting prospects for demand, and a trade surveyor reported increased exports from Malaysia.
August-delivery palm oil rose as much as 0.8 percent to 2,454 ringgit ($751) a metric ton on the Malaysia Derivatives Exchange, rebounding from 2,410 ringgit yesterday, the lowest level since Jan. 29. The contract was at 2,440 ringgit at the 12:30 p.m. trading break in Kuala Lumpur.
Crude oil, which fell to less than $70 a barrel earlier this week on concern Europe’s debt crisis may hurt the global economic recovery, rose as much as 2 percent to $71.29 today. Malaysia’s palm oil exports rose 7.1 percent in the first 20 days of May, surveyor Intertek said today.
“We are optimistic that the crude palm oil sector outlook is still good,” said Herman Koeswanto, an analyst at PT Andalan Artha Advisindo Sekuritas in Jakarta. There was “strong demand in Asia,” Koeswanto said.
Soybeans in Chicago climbed as much as 1 percent to $9.4775 a bushel, and were at $9.44 at 12:31 p.m. Singapore time. Soybeans, which are crushed to make a rival vegetable oil, have lost 10 percent this year amid a record global crop. Soybean oil has dropped 8.3 percent this year.
Palm oil may advance to as much as 2,480 ringgit this week if soybeans don’t fall to less than $9.30 a bushel, Scott Briggs, agricultural commodities strategist at Australia & New Zealand Banking Group Ltd., said yesterday.
China, India
Malaysia’s palm oil exports advanced to 775,995 tons in the first 20 days of May as higher shipments to China and India offset reduced deliveries to Europe, the Intertek data showed.
Shipments to China, the largest consumer of edible oils, and to India gained after slumping in April, when the countries switched to soybean supplies from South America. Exports to China jumped 21 percent to 219,260 tons in the first 20 days of this month, the Intertek data showed.
Shipments to the European Union, the second-largest destination, dropped 27 percent to 131,508 tons. The debt crisis in Europe has driven the euro to a four-year low against the dollar, curbing importers’ purchasing power. The Malaysian ringgit has surged 22 percent against the euro this year.
The premium of soybean oil over palm oil has widened to a four-week high of $80.11 a ton from a 52-week low of $54.94 three weeks ago, according to Bloomberg data. Palm oil enjoyed a “competitive advantage among oilseeds,” said Koeswanto at Andalan Artha.
China’s rapeseed and cotton crops may have been damaged by recent heavy rain and snow, threatening to reduce output in the world’s largest consumer of both commodities, according to local news reports this week, including from cnyouzhi.com.
Rapeseed production this year may fall to less than 10 million tons to the lowest level since 2007, Li Qiang, managing director at Shanghai JC Intelligence Co., said yesterday. Output was 11 million tons last year, he said.
Palm oil for January delivery on the Dalian Commodity Exchange jumped 1.1 percent to 6,642 yuan ($973) a ton at the 11:30 a.m. trading break. Soybean oil gained 0.8 percent to 7,568 yuan.
To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net
