Palm Oil Climbs on Speculation U.S. Soybean Crop May Be Reduced
Palm oil gained for the first time in four days before a government report that may show the U.S. soybean crop will be smaller than forecast after dry weather hurt yields, reducing global oilseed supplies.
Palm for November delivery advanced 0.5 percent to close at 2,344 ringgit ($716) a metric ton on the Bursa Malaysia Derivatives. Palm oil for physical delivery in September was at 2,375 ringgit, data compiled by Bloomberg show.
Farmers may harvest 3.13 billion bushels of soybeans, 3.7 percent less than estimated a month earlier, according to a Bloomberg survey of analysts. Conditions in August signal a large cut to expected production, curbing the decline in prices in coming months, Goldman Sachs Group Inc. said yesterday. The U.S. Department of Agriculture releases forecasts based on farmer and field surveys in Washington today.
“In recent weeks, the climate has not been very supportive for the growth of the soybean crop, so you may expect the report to show a decline in yields,” Prathamesh Mallya, an analyst at AnandRathi Commodities Ltd., said by phone from Mumbai. A smaller crop will lead to less soybean oil production which will increase consumption of palm, he said.
Palm oil may extend a decline as supply of the most used cooking oil from Indonesia and Malaysia climbs and biodiesel demand peaks, said Dorab Mistry, director at Godrej International Ltd. A rally in futures since the end of July is over and prices will drop from now, Mistry said in remarks prepared for a conference in Singapore today.
Soybeans for November gained 0.3 percent to $13.625 a bushel on the Chicago Board of Trade as soybean oil for delivery in December rose 0.3 percent to 43.07 cents a pound. Palm and soybean oil are substitutes in food and fuel uses.
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