Palm oil headed for the biggest weekly gain in more than a month on speculation that stockpiles in Malaysia, the world’s second-largest producer, may decline as demand rebounds.
The contract for May delivery gained as much as 0.7 percent to 2,451 ringgit ($789) a metric ton on the Malaysia Derivatives Exchange, before trading at 2431 ringgit at 11:37 a.m. in Kuala Lumpur. Futures have advanced 2.7 percent this week, the biggest such increase since the five days ended Feb. 1.
Futures may advance this year as the global economy recovers, Malaysian Plantation Industries and Commodities Minister Bernard Dompok said this week. Demand for the commodity used in everything from candy to instant noodles will increase after prices fell, according to Dinesh Shahra, managing director of Ruchi Soya Industries Ltd., India’s biggest importer.
“An increase in Indonesian exports tax this month and the recent decline in prices have made Malaysian palm oil exports attractive,” Ryan Long, a vice president of futures and options at OSK Investment Bank Bhd., said by phone from Kuala Lumpur. “Speculators may also be covering short positions,” he said, referring to investors reversing bets on further declines.
Indonesia, the biggest producer, raised export tax on crude palm oil to 10.5 percent for this month from 9 percent in February. Malaysian inventories, which were at 2.58 million tons in January, may have decreased to 2.44 million tons last month, according to a Bloomberg survey. Official data from the Malaysian Palm Oil Board are due for release on March 11.
Soybean oil for May delivery was little changed at 50.60 cents a pound on the Chicago Board of Trade. Soybeans for May delivery gained 0.2 percent to $14.77 a bushel.
Refined palm oil for delivery in September gained 0.7 percent to 6,618 yuan ($1,064) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month rose 0.8 percent to 8,324 yuan a ton.
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