Palm Advances to Five-Week High on Rising Demand Before Ramadan

(Businessweek) – Palm oil climbed to the highest level in more than five weeks on speculation that an increase in demand before the Muslim fasting month of Ramadan may cut stockpiles in Malaysia, the second-largest producer.

The contract for August delivery rose as much as 1.2 percent to 2,363 ringgit ($783) a metric ton on the Bursa Malaysia Derivatives, the highest price for most-active futures since April 12, before trading at 2,362 ringgit at 4:14 p.m. in Kuala Lumpur.

The world’s most used edible oil may advance next month as demand grows ahead of Ramadan, before resuming a decline, Dorab Mistry, director at Godrej International Ltd., said yesterday. Purchases from the Middle East and South Asia usually climb before Ramadan, which begins in July this year, when communal meals boost total consumption.

“The strong demand will be from Ramadan stock-up and also strong demand from the Northern Hemisphere because of warmer weather,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd., referring to Europe and the U.S. where demand drops in winter as palm oil clouds in cooler temperatures. “Inventory will still decline in May.”

Stockpiles may drop for a fifth month to 1.84 million tons in May as demand will outpace supply, said Lim. Reserves declined 11 percent to 1.93 million tons last month, according to the Malaysian Palm Oil Board.

Refined palm oil for September delivery advanced 0.9 percent to close at 6,104 yuan ($995) a ton on the Dalian Commodity Exchange, while soybean oil climbed 1.3 percent to end at 7,536 yuan. On the Chicago Board of Trade, soybeans for July delivery were little changed at $14.7875 a bushel and soybean oil for the same month rose 0.3 percent to 49.61 cents a pound.