BLBG: Palm Oil Extends Rally to 28-Month High as Demand Set to Outstrip Supply
Palm oil climbed for a fifth day to the highest level in 28 months on concern that global supplies will fail to meet demand as adverse weather damages crops.
The January-delivery contract gained as much as 1.7 percent to 3,452 ringgit ($1,117) a metric ton before closing at 3,396 ringgit on the Malaysia Derivatives Exchange, the highest price since July 17, 2008. Prices are set for an 11th week of gains, the longest rally since 2007.
Output in Malaysia, the second-biggest producer, declined to 14.3 million tons in the 10 months ended Oct. 31, from 14.5 million tons, the nation’s palm oil board said yesterday. The data came out a day after the U.S. Department of Agriculture said soybean inventories before next year’s harvest will be 30 percent less than forecast last month. Palm and soybean oils can be used interchangeably in food and biofuels.
“We will review our palm oil price forecasts next month to adjust for the impact of potential weather disruptions on South American soybean plantings,” Ivy Ng, an analyst at CIMB Investment Bank Bhd. in Kuala Lumpur, said in an e-mailed report. Malaysia’s “lower-than-expected production will support near- term palm-oil prices,” he said.
Soybeans traded in Chicago rose as much as 1.3 percent to $13.36 a bushel, near a 26-month high and traded at $13.2650 a bushel at 6:09 p.m. in Singapore. Soybean oil advanced for a third day to add as much as 1.1 percent to 54.85 cents a pound, the highest since August 2008.
China Demand
Edible-oil prices are set to climb as growth in worldwide supply fails to keep pace with the increase in demand for a third year, with weather patterns hurting crops, Godrej International Ltd. Director Dorab Mistry said in prepared remarks at a conference in China Nov. 7.
China’s soybean imports in the 2010-2011 marketing year may be as much as 60 million tons, according to unidentified global grain trading companies cited by the China National Grain & Oils Information Center on Oct. 25. The nation bought 50.3 million tons a year earlier.
In China, palm oil for September delivery advanced 0.2 percent to 9,574 yuan ($1,445) in Dalian. Soybean oil for September delivery gained 0.4 percent to 10,366 yuan.
CME Group Inc.’s January palm oil contract, pegged to the Malaysian benchmark price, gained as much as 0.9 percent to $1,093 a ton and traded at $1,107 at 6:09 p.m.
To contact the reporter 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
