BLBG: Palm Oil Climbs to Highest in More Than Two Years on U.S. Soybean Harvest
Palm oil climbed to the highest level in more than two years on speculation that the U.S. government will lower its soybean production estimate this month, squeezing global cooking oil inventories by the most in 17 years.
The January-delivery contract on the Malaysia Derivatives Exchange climbed as much as 1.1 percent to 3,095 ringgit ($1,000) a metric ton, the highest level in intraday trading since July 28, 2008. The contract gained 1.9 percent last week, a ninth straight weekly gain and the longest since June 2007.
Inventories of soybean oil and palm oil will drop 12 percent in the coming year as China and India increase consumption by 11 percent, U.S. Department of Agriculture data show. The USDA may lower its estimate of soybean output, driving soybean and palm oils prices higher, said Ivy Ng, an analyst at CIMB Investment Bank Bhd.
“Until we have confirmation about what the USDA will do as far as the estimates are concerned, vegetable oil prices may continue to go up,” Ng said today. “With the weather still a concern in Latin America, the supplies can really get tight in the coming months, with a lot of festivities around.”
Palm oil may rise 18 percent to 3,600 ringgit ton by March, extending this year’s 15 percent advance, according to Murali Krishna P.V., chief executive officer of TransGraph Consulting Pvt., an adviser to Bunge Ltd. and Cadbury Plc. Soybean oil traded in Chicago may gain 16 percent to 57 cents a pound, extending this year’s 21 percent rally, he said in an interview from Hyderabad, India.
‘Critical Period’
“The critical period of tightness is yet to come,” said Dorab Mistry, a director at Godrej International Ltd. who has traded cooking oils for more than three decades and who correctly predicted gains in palm oil and soybean prices since June. “We’re not doing enough to raise production of vegetable oils, and the weather the world over is troublesome.”
A lack of rain in the center-west of Brazil is delaying planting in a region that grows 47 percent of the country’s soybeans, the world’s second-largest crop behind the U.S.
Soybeans traded in Chicago, which climbed 11.7 percent last month, gained as much as 0.5 percent to $12.4225 a bushel today, and were at $12.4175 at 12:06 p.m. Singapore time. Soybean oil for December delivery added as much as 0.6 percent to 49.6 cents a pound, extending last month’s 9.3 percent gain.
Palm oil, the world’s most-consumed edible oil, today cost $100.01-a-ton less than Chicago soybean oil, according to Bloomberg data.
Palm oil exports from Malaysia, the second-biggest grower, fell 8.5 percent in October to 1.35 million tons from 1.48 million tons in September, independent market surveyor Intertek said today.
Palm oil for September delivery, the most-active contract on the Dalian Commodity Exchange, climbed as much as 1.9 percent to 8,626 yuan ($1,292) a ton today. September-delivery soybean oil surged as much as 1.9 percent to 9,558 yuan a ton today.
CME Group Inc.’s January palm oil contract, pegged to the Malaysian benchmark price, increased as much as 0.9 percent to $996.50 a ton in Singapore.
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
