July 17 (Bloomberg) -- Palm oil advanced for the first time in six days after a drop to a seven-month low yesterday attracted buyers of the world’s most consumed cooking oil.
The contract for October delivery, with the biggest volume, gained 1 percent to close at 2,250 ringgit ($705) a metric ton on the Bursa Malaysia Derivatives. The September-delivery contract fell yesterday to the lowest price at close for most-active futures since Dec. 13. Palm for local physical delivery in August was at 2,310 ringgit, data compiled by Bloomberg show.
Concerns over China’s economic slowdown and a bumper U.S. soybean harvest have led to speculation demand for palm would slow, driving prices down about 6.5 percent in the past five days. Palm oil fundamentals have improved and prices are poised to trade higher in the coming months, wrote Ong Chee Ting, analyst at Maybank Investment Bank Bhd., in a report today.
“Low prices may attract demand again,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. “The drop has factored in almost all of the negative news, which includes the higher soybean production estimate by the USDA and weak exports for the first 15 days. It’s a technical rebound because it’s oversold, the RSI is below 30.”
Palm oil’s 14-day relative strength index fell below 30 on July 15 and yesterday, a technical signal to some analysts that an asset’s price has fallen too fast and is poised to increase.
Exports from Malaysia, the largest producer after Indonesia, fell 24 percent to 536,391 tons in the first 15 days of July from the same period in June, surveyor SGS (Malaysia) Sdn. said on July 15.
Refined palm oil for January delivery lost 0.4 percent to 5,616 yuan ($915) a ton on the Dalian Commodity Exchange, the lowest price at close for the most-active contract since July 2009, while soybean oil for delivery in the same month advanced 0.5 percent to end at 7,240 yuan.
Soybean oil for delivery in December climbed 0.2 percent to 45.39 cents a pound on the Chicago Board of Trade, while soybeans for delivery in November fell 0.3 percent to $12.825 a bushel.
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