Palm Oil Heads for Fourth Weekly Gain as Demand Seen Increasing
Category: Oilseeds
(Bloomberg) – Palm oil headed for a fourth weekly advance on speculation that rising demand in India and China may counter a build-up in stockpiles in Malaysia as output expands seasonally in the world’s second-largest producer.
Palm for November delivery rose as much as 0.6 percent to 2,427 ringgit ($732) a metric ton on the Bursa Malaysia Derivatives, and was at 2,426 ringgit at 12:13 p.m. in Kuala Lumpur. Futures are poised to climb 0.9 percent this week, set for the best weekly run since June 7. Palm oil for physical delivery in September was at 2,415 ringgit yesterday, data compiled by Bloomberg show.
Futures have rebounded 14 percent since reaching the lowest price since October 2009 on July 26 on speculation that a rally in soybeans would boost demand for the cooking oil used in everything from candy to biofuel. Reserves in Malaysia probably expanded 3 percent to 1.71 million tons in August from 1.66 million tons in July, according to a Bloomberg survey. That would be 19 percent lower than a year ago, according to data from the Malaysian Palm Oil Board.
“The stock levels at this juncture are lower than a year ago, so from a starting point we’re better off already as we head into the high production season,” Ivy Ng, an analyst at CIMB Investment Bank Bhd., said by phone in Kuala Lumpur. “Demand is going to be strong ahead of festive events in India and China’s Mid-Autumn festival.”
Festival Demand
India, the world’s biggest importer, celebrates the festival of Diwali on Nov. 3, while markets in China will be closed for the Mid-Autumn Festival on Sept. 19 and 20.
Futures may trade in a range of 2,200 ringgit to 2,600 ringgit in the near term, supported by a weaker ringgit and higher crude oil prices, Ng said.
Soybeans for November delivery climbed 0.2 percent to $13.70 a bushel on the Chicago Board of Trade. Soybean oil for delivery in December advanced 0.8 percent to 43.87 cents a pound.
Refined palm oil for January delivery climbed 1.2 percent to 5,636 yuan ($921) a ton on the Dalian Commodity Exchange. Soybean oil increased 1.2 percent to 7,278 yuan a ton.
