Palm oil advanced to 3,500 ringgit ($1,110) a metric ton for the first time since July 2008 as an increase in shipments from the biggest producers boosted optimism that demand remains strong amid low supplies.
The February-delivery contract rose as much as 2.6 percent to 3,500 ringgit on the Malaysia Derivatives Exchange and closed at 3,486 ringgit, the highest price since July 15, 2008. Futures climbed 11 percent in November, the fifth monthly increase.
Exports from Malaysia climbed 11.7 percent to 1.51 million tons in November from the previous month, surveyor Intertek said yesterday. Shipments rose to 1.56 million tons, Societe Generale de Surveillance said. Sales from Indonesia climbed 13 percent to 1.45 million tons in October from a year earlier, the Indonesian Palm Oil Association said Nov. 25. The two countries represent about 90 percent of global output.
“Encouraging export figures from Malaysia is a positive sign that demand isn’t subsiding,” Ker Chung Yang, an analyst at Phillip Futures Pte., said by phone from Singapore.
Output in Indonesia may decline this year to 21.8 million tons, less than 22.5 million tons forecast previously, on lower yields, the China National Grain & Oils Information Center said on Nov. 29, citing OilWorld, an industry publication.
Stockpiles in Malaysia may not be enough to meet demand during the Lunar New Year holiday in February, according to Arhnue Tan, a senior analyst at ECM Libra Capital Sdn.
“There are some supply concerns in Malaysia, which should probably keep prices strong into early next year,” Tan said.
Malaysia’s production fell 1 percent to 14.3 million tons in the first 10 months of the year, according to data from the nation’s palm oil board. Output this year may total about 17.6 million tons, Plantation Industries and Commodities Minister Bernard Dompok said Nov. 17.
Still, a recovery in palm and soybean oils production in 2011 “may put downward pressure on prices” said Siti Rudziah Salikin, an analyst at Standard & Poor’s Equity Research Services. Strong demand from China and India will help limit the downside, according to the report.
Palm oil may average 3,000 ringgit in the quarter ending December and 2,800 ringgit in 2011, the report said.
Dry weather in South America, especially Argentina, could affect soybean crops, supporting the palm oil market, Phillip Futures’ Ker said. The two cooking oils are direct substitutes.
January-delivery soybean oil climbed as much as 1.2 percent to 51.63 cents a pound in after-hours trading in Chicago, while soybeans for January delivery advanced as much as 1 percent to $12.5550 a bushel.
China, the world’s biggest cooking-oil user, has ordered four suppliers including Wilmar International Ltd. and Cofco Ltd. not to lift product prices to help slow inflation, the National Business Daily said, citing people it didn’t identify.
September-delivery palm oil on the Dalian exchange climbed 1.6 percent to 8,984 yuan ($1,348) a ton, the highest closing price since Nov. 15, and soybean oil for delivery in the same month advanced 1.1 percent to 9,628 yuan a ton, a two-week high.
CME Group Inc.’s March palm oil contract fell as much as 1.4 percent to $1,077.25 a ton. Futures jumped 6.4 percent yesterday, the most since the contract began trading in May.