BLBG: Palm Oil Gains for Second Day as Rival Soybean Oil Reaches Two-Year High
Palm oil climbed for a second day, tracking gains in rival soybean oil which jumped to the highest level in almost two years after the dollar weakened, increasing the appeal of U.S. commodities to overseas buyers.
December-delivery futures advanced as much as 1 percent to 2,699 ringgit a metric ton ($873) on the Malaysia Derivatives Exchange and closed the morning session at 2,692 ringgit. Markets in China, Japan and Hong Kong are closed for holidays.
“Palm oil is up on global cues like firm soybeans and a weak dollar,” Kishore Narne, head of research at AnandRathi Commodities Ltd., said in Mumbai. “There’s strong forward- booking of cargoes from India and China that’s keeping prices firm despite a strong ringgit and likely increase in output.”
December-delivery soybean oil traded in Chicago jumped as much as 2 percent to much as 0.8 percent to 44.13 cents a pound, the highest since Oct. 2, 2008. That widened the vegetable oil’s premium over palm oil to $97.28 a ton from $88.9 a ton yesterday, according to Bloomberg data.
Soybean futures for November delivery gained as much as 0.9 percent to $10.9825 a bushel on the Chicago Board of Trade. The oilseed reached a 15-month high of $10.995 on Sept. 20.
The dollar declined for a fourth day against a six-currency basket before a report that may show existing U.S. home sales were near the lowest in 10 years, backing the case for the Federal Reserve to keep borrowing costs low. U.S. shippers sold 226,000 tons to China, the Department of Agriculture said yesterday, bringing this week’s total to 621,000 tons.
Palm oil has rebounded 19 percent from an eight-month low on July 7 on speculation that demand will increase from Asian countries celebrating festivals and that harvesting in Malaysia and Indonesia will be disrupted in November and December if La Nina causes flooding in growing areas.
Futures may rally another 3 to 4 percent before an increase in production weighs on prices, AnandRathi’s Narne said. A rally in Malaysian ringgit has increased the cost for buyers, he said.
The ringgit has risen 10.9 percent this year, the best performance among Asia’s 10 most-active currencies.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
