BLBG: Palm Oil Gains as Demand Outlook Boosted by Advance in Crude, Soybeans
Palm oil rose as much as 1.1 percent, reversing last week’s decline, after crude oil and soybeans advanced, boosting the demand outlook for the tropical commodity.
The September-delivery contract advanced to 2,410 ringgit ($747) a metric ton on the Malaysia Derivatives Exchange, and paused at 2,402 ringgit at the 12:30 p.m. trading break. It fell 0.7 percent last week. Crude oil climbed for a third day as Alex, the first named tropical storm of the Atlantic, moved into the southwestern Gulf of Mexico.
“The market is a bit oversold and may stage a rebound with the help of stronger crude oil prices,” said Ryan Long, a futures trader at OSK Investment Bank. Palm oil often tracks crude oil movements as it can be used in biofuels.
Crude for August delivery was little changed at $78.75 a barrel on the New York Mercantile Exchange at 12:32 p.m. in Singapore. It earlier gained 0.7 percent to $79.38 a barrel, the highest price since May 6. November-delivery soybeans in Chicago gained as much as 0.4 percent to $9.1575 a bushel.
Kuala Lumpur Kepong Bhd., Malaysia’s third-largest listed plantation company, is expecting “yields to rise up till October or November,” and that palm oil prices would have to fall to attract buyers, Roy Lim, a director at the company, said last week in an interview.
Gains Capped
“I do not see it shooting above 2,430 ringgit with absence of fresh positive news,” OSK’s Long said, referring to palm oil.
Rising production may extend a drop in palm oil futures, which have dropped about 10 percent this year amid a record global crop of rival oilseeds. About 90 percent of palm oil, the world’s cheapest edible oil, is produced in Indonesia and Malaysia. Dry weather late last year and early this year caused by the El Nino weather phenomenon stressed oil palms, helping drive a 57 percent rally in prices in 2009.
Global oilseed harvests are at a record this year on increased soybean production in South America, OilWorld, an industry publication, said on June 18.
CME Group Inc.’s September-delivery palm oil contract, which is pegged to the Malaysian benchmark price, gained 0.6 percent to $740.75 a ton.
On the Dalian Commodity Exchange, January-delivery palm oil was little changed at 6,500 yuan ($957) a ton at the 11:30 a.m. trading break, while Dalian soybean oil was little changed at 7,562 yuan.
To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net
