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Palm Oil Advances for Second Day as Malaysian Exports Increase

April 3 (Bloomberg) -- Palm oil climbed for a second day on speculation that exports from Malaysia may increase, paring inventories in the world’s second-largest producer.

The contract for delivery in June rose 0.6 percent to 2,396 ringgit ($777) a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Prices have tumbled 32 percent in the past year as stockpiles expanded amid slowing demand.

Exports rose 2.8 percent to 1.36 million tons in March from a month ago, surveyor Intertek said on April 1. That may help cut inventories, which fell to 2.44 million tons in February after reaching a record 2.63 million tons in December, according to Ivy Ng, an analyst at CIMB Investment Bank Bhd.

“The fact that exports are positive month-on-month suggests that there is demand at these levels,” Ng said by phone from Kuala Lumpur. “Short-term uncertainty over the elections could affect the ringgit. The only concern people have right now is that the elections should happen smoothly.”

Malaysian Prime Minister Najib Razak dissolved parliament today and his 13-party Barisan Nasional coalition, which won the 2008 vote by its slimmest margin, faces a resurgent opposition alliance led by former deputy prime minister Anwar Ibrahim. Under Malaysian law, elections must be held within 60 days of dissolution.

Futures will trade between 2,400 ringgit and 2,700 ringgit a ton through May as the Malaysian currency weakens before elections, Dorab Mistry, director at Godrej International Ltd., said March 22. The ringgit, Asia’s fifth-worst performing currency this year, rose 0.1 percent, rebounding from a decline of as much as 0.3 percent.

Mistry Forecast

“The ringgit has also shown a tendency towards weakness as the Malaysian elections approach,” Mistry said. “If the ringgit weakens as the election campaign gets under way, prices denominated in ringgit have greater scope to rise.”

Palm-oil use is poised to rise at an above-average pace in the six months through September on a discount to other oils and fats amid expected record output, Oil World said yesterday.

Soybean oil for May delivery was little changed at 49.65 cents a pound on the Chicago Board of Trade, while soybeans for May fell 0.3 percent to $13.9025 a bushel.

Refined palm oil for September delivery dropped 0.2 percent to close at 6,216 yuan ($1,002) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month retreated 0.2 percent to end at 7,858 yuan a ton.

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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