Palm Oil Advances to Two-Month High on Ringgit, Soybean Outlook
Palm oil climbed for the fifth day to a two-month high on speculation that the U.S. soybean crop will be smaller than previously estimated and as the ringgit fell to a three-year low, boosting demand for Malaysian supplies.
Palm oil for November delivery rose as much as 1.4 percent to 2,468 ringgit ($741) a metric ton on the Bursa Malaysia Derivatives, the highest for the most-active contract since June 20, before ending the morning session at 2,443 ringgit. A fifth day of gain would be the best run since the five-day advance through May 29. Palm oil for physical delivery in September was at 2,490 ringgit, data compiled by Bloomberg show.
Soybean in Chicago gained the most since 2011 yesterday as hot, dry weather in the Midwest threatens to erode crop yields in the U.S., the top producer of the oilseed that can be crushed to make soybean oil. The soybean harvest will be 3 percent below the government’s forecast on Aug. 12, Professional Farmers of America said Aug. 23, after a tour of crops in seven states last week. Soybean oil rallied the most since October 2010 yesterday.
“The spike is due to gains in soybean oil,” Han Qiang Sim, an analyst with Phillip Futures Pte., said by phone from Singapore. “Exports from Malaysia are getting better as a weaker ringgit encouraged demand.”
The ringgit, which has lost 8.2 percent against the U.S. dollar this year, fell to the weakest level since June 2010 today. Palm oil exports from Malaysia, the second-largest producer, climbed 7.1 percent to 1.16 million tons in the first 25 days of this month from the same period in July, surveyor Intertek said yesterday. Shipments gained 7.5 percent to 1.14 million tons, according to SGS (Malaysia) Sdn.
Soybean oil for delivery in December fell 0.3 percent to 44.76 cents a pound on the Chicago Board of Trade after closing 4.4 percent higher at 44.88 cents yesterday. Soybeans for November delivery gained 0.3 percent to $13.9325 a bushel, extending yesterday’s 4.6 percent advance.
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