Palm advanced the most in almost two weeks on speculation that an increase in crude oil prices to the highest level in more than a month will boost demand for the tropical oil in biodiesel as production declines in Indonesia.
The contract for February delivery rose 1.5 per cent to RM2,656 a metric tonne on the Bursa Malaysia Derivatives, the biggest gain for most-active futures since November 21. Futures advanced 8.9 per cent in 2013.
Palm oil, used in everything from candy to detergents, entered a bull market last month and is heading for its first annual gain in three years as production drops at plantations in Indonesia and biodiesel demand increases. Output in Indonesia, the biggest producer, will decline by 500,000 tonnes to 27.5 million tonnes this year, Dorab Mistry, director at Godrej International Ltd, said on November 29. That’s the first drop since 1998, according to US Department of Agriculture data.
"Higher crude oil prices will mean increased usage of palm in biodiesel," said Ivy Ng, an analyst at CIMB Investment Bank Bhd, by phone from Kuala Lumpur. "Palm has generally trended down in the last few days and we are seeing some bargain buying because there are expectations that prices will rise as we head into the lower production months."
Soybean oil for January delivery advanced 0.7 per cent to 40.37 cents a pound on the Chicago Board of Trade. Soybeans climbed 0.2 per cent to US$13.225 a bushel.
Refined palm oil for May delivery gained 0.4 per cent to close at 6,252 yuan (US$1,026) a tonne on the Dalian Commodity Exchange. Soybean oil ended little changed at 7,262 yuan.-- Bloomberg
Read more: Palm oil climbs most in two weeks http://www.btimes.com.my/Current_News/BTIMES/articles/20131204131715/Article/index_html#ixzz2olEhScx8
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