Palm oil climbed to a 17-month high on speculation that rising exports from Malaysia, the world’s biggest producer after Indonesia, will reduce stockpiles.
The contract for May delivery advanced 1.7 percent to 2,755 ringgit ($832) a metric ton on the Bursa Malaysia Derivatives, the highest price since September 2012. The biggest jump in futures since Nov. 21 extended gains to 3.6 percent this year.
Palm oil rallied from a three-year low in July on prospects for increased local and overseas demand, and on concern that dry weather may curb production in some areas of Indonesia and Malaysia. The two countries represent about 90 percent of global supplies, U.S Department of Agriculture data show. Exports from Malaysia rose 17 percent to 875,091 tons in the first 20 days of this month from the same period in January, Intertek said today.
“Rising exports from Malaysia is good news,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank. Stockpiles in Malaysia will probably shrink to 1.8 million tons by the end of this month from 1.93 million tons at the end of January, he said.
“On top of favorable export demand, domestic palm oil consumption in Indonesia and Malaysia is likely to stay strong,” Oversea-Chinese Banking Corp. said in a report today. “The seasonally lower production in the early part of the year has been contributing to stronger palm oil prices.”
The commodity may trade at an average 2,700 ringgit a ton in 2014, the Singapore-based bank said. Palm oil averaged 2,416.6 ringgit in Kuala Lumpur last year, according to data compiled by Bloomberg.
Soybean oil for delivery in May rose as much as 1.6 percent to 41.16 cents a pound on the Chicago Board of Trade, the highest level since Nov. 25, amid concern that drought in Brazil may hurt supply. Soybeans rose 0.5 percent to $13.4875 a bushel, taking its climb this year to 4.3 percent.
Refined palm oil for May delivery rose 0.4 percent to 6,100 yuan ($1,003) a ton on the Dalian Commodity Exchange. Soybean oil advanced 0.2 percent to 6,810 yuan.