Palm Oil Gains to Eight-Week High as Production Seen DroppingRanjeetha Pakiam
Palm oil climbed to the highest level in almost eight weeks on speculation that production in Malaysia is poised to decline this month, curbing a potential build-up in stockpiles in the world’s second-largest producer.
The contract for delivery in January advanced 0.7 percent to 2,455 ringgit ($774) a metric ton on the Bursa Malaysia Derivatives, the highest price at close for most-active futures since Aug. 28. Palm for physical delivery in November was at 2,450 ringgit, data compiled by Bloomberg show.
Malaysia’s output declined about 11 percent in the first 20 days of this month according to estimates from planters, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari Sdn. in Selangor. While the peak output season typically lasts from July to October each year, a new cycle may see production remain high until April, Dorab Mistry, director at Godrej International Ltd., said Sept. 22.
“Stockpiles will certainly remain below 2 million tons for the rest of the year” Paramalingam said.
Reserves dropped 32 percent to 1.78 million tons last month from a record 2.63 million tons in December, data from the Malaysian Palm Oil Board shows. Output in September gained 10 percent to 1.91 million tons.
Soybeans for delivery in January lost 0.6 percent to $12.925 a bushel on the Chicago Board of Trade, while soybean oil for December fell 0.4 percent to 41.48 cents a pound.
Refined palm oil for May delivery fell 0.8 percent to close at 6,106 yuan ($1,002) a ton on the Dalian Commodity Exchange and soybean oil retreated 1.1 percent to end at 7,176 yuan.