Palm oil climbed for a sixth day to a 17-month high on speculation that dry weather will damage soybean crops in Brazil, boosting demand for the tropical oil used in everything from food to fuel.
The contract for May delivery advanced as much as 0.7 percent to 2,734 ringgit ($829) a metric ton on the Bursa MalaysiaDerivatives, the highest level since September 2012, and was at 2,716 ringgit at 3:11 p.m. in Kuala Lumpur.
Futures rallied 27 percent from a three-year low of 2,137 ringgit in July on concern dry weather in parts of Indonesia and Malaysia, which account for more than 80 percent of global palm oil supplies, may curb production. Soybeans rallied to the highest since December today as drought scorched fields in Brazil, the world’s biggest exporter of the oilseed, crushed to yield an alternative oil to palm oil.
“Soybean oil is providing a lot of support to palm,” said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental Singapore Pte. “Stockpile in Malaysia will come down because of rising exports.”
Malaysia’s palm oil production in the first half is seen impacted by a lack of rainfall in some regions in June and July 2013, Hariyanto Wijaya, an analyst at Mandiri Sekuritas, unit of Indonesia’s largest bank by assets, said in an e-mail. Growth in output in Indonesia is not as good as previous years because of a lack of newly matured crop as new planting in 2010 was relatively small, he said.
Palm oil shipments from Malaysia climbed 27 percent to 595,125 tons in first 15 days of the month, compared with the same period in January, SGS (Malaysia) Sdn. said Feb. 17.
Soybean oil for delivery in May fell 0.2 percent to 40.58 cents a pound the Chicago Board of Trade today after climbing 3 percent yesterday to the highest level at close for a most-active contract since Dec. 11. Soybean futures were little changed at $13.4675 a bushel after jumping to $13.4925, the highest level since Dec. 10.
Refined palm oil for May delivery rose 1.3 percent to 6,078 yuan ($1,001) a ton on theDalian Commodity Exchange. Soybean oil climbed 1.4 percent to 6,798 yuan.
To contact the reporters on this story: Pratik Parija in New Delhi atpparija@bloomberg.net; Yoga Rusmana in Jakarta at yrusmana@bloomberg.net
To contact the editor responsible for this story: James Poole atjpoole4@bloomberg.net
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