BLBG: Palm Oil in Malaysia Rebounds With Soy After Biggest Decline in Five Weeks
Palm oil, set to climb for the first quarter in three, rebounded from the biggest fall in five weeks ahead of a report on U.S. inventories of soybeans, used to make a rival oil.
December-delivery palm oil gained as much as 1.1 percent to 2,727 ringgit ($876) a metric ton on the Malaysia Derivatives Exchange and paused at 2,723 ringgit at the 12:30 p.m. break. Prices dropped 1.4 percent yesterday, the biggest fall since Aug. 24. Soybean oil and palm oil can be used as substitutes in food and fuel applications.
“For this week, the strong correlation between crude palm oil and Chicago soybeans is likely to remain,” said Ker Chung Yang, an investment analyst at Philip Futures Pte.
Soybeans in Chicago rose for the first time in three days, gaining as much as 0.8 percent to $11.0825 a bushel, ahead of a U.S. Department of Agriculture inventory report today for soybeans, corn and wheat. Soybeans were $11.0425 a bushel at 1:09 p.m. Singapore time.
“Should Chicago soybeans re-ignite another rally after the release of USDA quarterly stocks report, we expect crude palm oil to break above 2,750 ringgit levels,” Ker said.
Reserves of U.S. soybeans are forecast to reach 151 million bushels as of Sept. 1, from 138 million a year earlier, according to a survey of 19 analysts by Bloomberg News.
Palm oil has climbed 15 percent this quarter as demand increased before festivals and as excess rain hurt harvests, causing stockpiles to drop in the seven months through July.
‘Harvest Challenges’
Heavy rain in Malaysia and Indonesia, the largest palm oil growers, have been “curbing crude palm oil producers’ harvesting ability and leading to significant logistic challenges,” causing supply concerns that supported prices, Credit Suisse analyst Teddy Oetomo said today.
Still, Malaysian palm oil reserves climbed in August, jumping 23 percent to 1.72 million tons from July, as output rose a fourth month, the country’s palm oil board said Sept. 15.
CME Group Inc.’s December palm oil contract, pegged to the Malaysian benchmark price, climbed 1.4 percent to $881.50 a ton. On the Dalian Commodity Exchange, May-delivery palm oil rose 0.2 percent to 7,696 yuan ($1,150) a ton at the 11:30 a.m. local-time break.
To contact the reporters on this story: Claire Leow in Singapore at cleow@bloomberg.net;
To contact the editor responsible for this story: James Poole at jpoole4@Bloomberg.net.
