Palm oil rebounded from the lowest level in three years as stockpiles in Malaysia, the largest producer after Indonesia, climbed less than expected in October.
The contract for January delivery advanced 0.4 percent to close at 2,324 ringgit ($758) a metric ton on the Malaysia Derivatives Exchange. Futures earlier slumped as much as 4.2 percent to 2,220 ringgit, the lowest price for the most-active contract since November 2009. The price retreated 7.2 percent last week, the most since the five days ended Sept. 28.
While reserves rose 1.1 percent to a record 2.51 million tons from the previous month, according to Palm Oil Board data, they were less than the median estimate of 2.7 million tons in a Bloomberg survey. Output fell 3.3 percent to 1.94 million tons from a record of 2 million tons in September, the board said. Exports surged 16 percent to 1.76 million tons.
“The data today curbed negative expectations on stocks,” said Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services Pvt. in Mumbai. “That’s leading to short-covering, more than anything else. There’s even some bargain-hunting as people have come in to buy.” Short-covering refers to investors reversing bets on declining prices.
Output typically peaks between July and October before tapering off from November onwards.
“Given that November, December output should drop, we think that prices have pretty much bottomed out already,” said Ben Santoso, an analyst at DBS Group Holdings Ltd. in Singapore.
Soybean oil for December delivery slid as much as 2.6 percent to 46.52 cents a pound on the Chicago Board of Trade, the lowest level for the most-active contract since October 2010, as the U.S. government raised its forecast for soybean output. The U.S. harvest will total 2.971 billion bushels (80.86 million tons), up 3.9 percent from 2.86 billion estimated in October, the U.S. Department of Agriculture said Nov. 9. Soybeans are crushed to make oil which competes with palm for use in food and fuel.
Soybeans for January declined as much as 2.1 percent to $14.2125 a bushel, the cheapest price for the most active contract since June, before trading at $14.27.
Palm oil for May delivery lost 2.3 percent to close at 6,554 yuan ($1,052) a ton on the Dalian Commodity Exchange, the lowest closing level for the most active contract since July 2010. In intraday trading, futures fell by the maximum daily limit of 4 percent from the previous settlement.
Soybean oil for the same month fell 3.1 percent to end at 8,348 yuan a ton, the lowest price since September 2010. The contract also fell earlier by the daily limit of 4 percent.