Palm Oil Advances as Prices Near Seven-Month Low Boost DemandRanjeetha Pakiam
Palm oil climbed the most in more than three months as a decline in prices to the lowest level this year spurred demand for the most consumed cooking oil.
The contract for delivery in October gained 1.8 percent to close at 2,291 ringgit ($717) a metric ton on the Bursa Malaysia Derivatives, the steepest climb since April 2. Futures fell on July 16 to the lowest price since Dec. 13. Palm for local physical delivery in August was at 2,340 ringgit, data compiled by Bloomberg show.
Palm oil, used in everything from noodles to biofuels, has lost 6 percent this year on concerns that slowing economies in China and India may curb demand and boost global stockpiles. Slower output growth in Malaysia last month may support the view that production is in a “biological low cycle,” Abah Ofon and Samiran Chakraborty, analysts at Standard Chartered Plc, wrote in a report dated yesterday.
“At the current price levels, there’s consumer buying interest,” said Donny Khor, deputy director of futures and commodities at RHB Investment Bank Bhd. Futures may drop if inventories start to accumulate with a pickup in production in the second half, he said.
Reserves in Malaysia dropped 37 percent to 1.65 million tons in June from a record in December. Output, which climbed 2.3 percent last month compared with a 6.3 percent gain in June 2012, is typically the highest from July to October each year. Exports from Malaysia fell 24 percent to 536,391 tons in the first 15 days of July, according to surveyor SGS (Malaysia) Sdn.
Refined palm oil for January delivery climbed 0.5 percent to end at 5,642 yuan ($919) a ton on the Dalian Commodity Exchange, after closing yesterday at the lowest price for the most-active contract since July 2009. Soybean oil for delivery in the same month advanced 0.4 percent to close at 7,272 yuan.
Soybean oil for delivery in December rose 0.2 percent to 45.60 cents a pound on the Chicago Board of Trade. Soybeans for delivery in November fell 0.6 percent to $12.7525 a bushel.