BS: Palm Oil Gains, Reversing Losses, as Recent Drop Lures Buyers
July 27 (Bloomberg) -- Palm oil gained for the first time in three days after the recent losses attracted buyers seeking to build inventories ahead of festivals in the most populous Asian nations.
October-delivery futures rose 0.5 percent to 2,485 ringgit ($781) a metric ton on the Malaysia Derivatives Exchange after falling 1.6 percent intraday. Prices fell 1.8 percent in the previous two sessions.
“The decline was beyond what most people had expected and there’s a fair bit of buying in the physical market ahead of the festivals,” said Ryan Long, a trader at OSK Investment Bank Sdn. “There was a fair bit of short-covering towards the end.”
Palm oil has climbed 8.6 percent in the past two weeks on speculation demand may rise among Asian countries and as weather threatens to disrupt production in the biggest producers of the tropical commodity. China, India, Pakistan and Indonesia mark important festivals in the three months ending September, with communal meals stoking edible oils consumption.
Prices fell earlier on concern lower exports from Malaysia, the second-biggest producer, may increase stockpiles this month for the first time in 2010. Shipments from Malaysia dropped 4.1 percent in the first 25 days of July to 1,074,329 tons from the same period in June, market surveyor Intertek said yesterday. Sales fell 0.9 percent to 1,103,439 tons, rival Societe Generale de Surveillance said.
“Exports have been lukewarm so far this month and there’s speculation that inventory in Malaysia may increase,” said Arhnue Tan, an analyst at ECM Libra Capital Sdn.
Inventories
An increase in Malaysian palm oil stockpiles this month would be the first gain since December, according to data from the Malaysian Palm Oil Board. Stockpiles fell to a 10-month low of 1.45 million tons in June, the board said July 12. Shipments advanced 5.5 percent to 1.44 million tons last month, it said.
December-delivery soybean oil lost as much as 0.7 percent to 39.29 cents a pound and the vegetable oil’s premium over palm oil slumped to $88.7 a ton from $99 yesterday, according to Bloomberg data.
CME Group Inc.’s October-delivery palm oil contract, pegged to the Malaysian benchmark price, lost 0.5 percent to $773.5 a ton yesterday.
On the Dalian Commodity Exchange, January-delivery palm oil tumbled fell 1.6 percent to 6,566 yuan ($969) a ton, while soybean oil dropped 1.1 percent to 7,562 yuan a ton.
--Editor: Ravil Shirodkar
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
