Palm oil rebounded after tumbling the most in more than a year as low stockpiles levels in Malaysia, the second-biggest grower, raised concerns over tight supply during the New Year holiday season. The February-delivery contract, the most-active based on volume, gained 1.6 percent to end at 3,318 ringgit ($1,063) a metric ton on the Malaysia Derivatives Exchange, after tumbling as much as 4.6 percent to 3,114 ringgit, the steepest loss since Sept. 28, 2009. The January-delivery contract, the most-active based on open-interest, slumped 4.4 percent to 3,125 ringgit a ton before settling 1.8 percent higher at 3,329 ringgit. “The rebound on the Dalian market sparked the recovery,” Arhnue Tan, senior investment analyst at ECM Libra Investment Bank, said by phone from Kuala Lumpur. Gains were driven by supply concern heading toward the end of the year as the current reserves in Malaysia of 1.8 million tons is not enough to meet demand, she said. Malaysian shipments rose 26.6 percent to 747,431 tons in the first 15 days of November from the same period in October, Intertek said Nov. 15. Sales jumped 28 percent to 777,761 tons, Societe Generale de Surveillance said. Output dropped to 14.3 million tons in the 10 months ended Oct. 31, from 14.5 million tons, the nation’s palm oil board said Nov. 10. Palm oil for September delivery on the Dalian Commodity Exchange dropped as much as 2.8 percent to 8,352 yuan ($1,258) a ton before closing 0.7 percent higher at 8,656 yuan. Soybean oil for delivery in the same month tumbled 3.2 percent to 9,100 yuan a ton, before closing at 9,384 yuan. The Dalian Commodity Exchange said Nov. 15 that it will curb “abnormal” trading to prevent price manipulation and other activities that disrupt an orderly market. Price Controls China may impose temporary price limits on “important daily necessities” and production materials to counter the fastest inflation in two years, the State Council said on its website yesterday after a meeting chaired by Premier Wen Jiabao. The measures “may curb China’s imports of soybean and edible oils in the near term due to fears that the government may release state reserves in the local market,” said Ivy Ng, an analyst at CIMB Investment Bank Bhd. in Kuala Lumpur. “It may prompt traders to liquidate speculative positions due to concern over weaker-than-expected export data,” she said. China also pledged to stabilize natural-gas prices, crack down on speculation in farm goods and ensure supplies of grains, vegetables, cooking oil and sugar. Data released Nov. 11 showed consumer prices rose 4.4 percent in October, the fastest in two years, spurring speculation that the central bank will increase interest rates for a second time this year. Rate Hike Expected Borrowing costs may be increased tomorrow, according to a report in yesterday’s China Securities Journal that cited an unidentified analyst. Rate decisions are often released on Fridays, or around the 20th of the month, the paper said. The central bank last month raised rates for the first time since 2007. January-delivery soybean oil gained as much as 2.9 percent to 50.70 cents a pound in Chicago, while soybeans for delivery in the same month rose 2.7 percent to $12.3725 a bushel. “The price weakness is likely to be temporary as China is unlikely to reduce imports of edible oils and oilseeds for long, given the upcoming festive holidays,” said CIMB’s Ng, referring to Lunar New Year celebrations in February. To contact the reporter on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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