Palm Oil Climbs as Stockpiles Seen Declining Most in Two Years

(Bloomberg) – Palm oil gained as a survey showed that inventories in Malaysia probably fell the most in more than two years in March as exports increased for the first time in five months from the world’s second-largest producer.

The contract for delivery in June advanced as much as 1.3 percent to 2,390 ringgit ($783) a metric ton on the Bursa Malaysia Derivatives, before trading at 2,377 ringgit at 11:44 a.m. in Kuala Lumpur. Futures lost 0.8 percent last week.

Inventories declined 7 percent to 2.27 million tons from February, the steepest monthly drop since January 2011, according to the median of estimates from two plantation companies and four analysts in a Bloomberg survey. Output gained 2.3 percent to 1.33 million tons, while exports rose 2.1 percent to 1.43 million, the survey showed. The Malaysian Palm Oil Board is scheduled to release the official data on April 10.

“If stockpiles were drawn down to somewhere below 2.3 million tons, that would be an encouraging figure,” said Donny Khor, associate director for futures and options at OSK Investment Bank Bhd. in Kuala Lumpur. “Production is not likely to rebound strongly in April, so as long as the export numbers are about the same as March, I think stockpiles can be drawn down another 50,000 tons.”

Inventories have fallen 7.2 percent to 2.44 million tons in February from a record 2.63 million tons reached in December, according to the board.

Soybean oil for May delivery gained 0.8 percent to 49.24 cents a pound on the Chicago Board of Trade. Soybeans for delivery in May climbed 0.9 percent to $13.745 a bushel.

Refined palm oil for September delivery rose 1.1 percent to 6,282 yuan ($1,012) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month gained 0.7 percent to 7,916 yuan a ton.