(Businessweek) – Palm oil traded near the highest level in 17 months on speculation that excess rain in Brazil may hurt soybean crops in the world’s largest exporter, boosting demand for the tropical oil.
The contract for May delivery earlier advanced as much as 0.8 percent to 2,777 ringgit ($846) a metric ton on the Bursa Malaysia Derivatives, the highest level for futures since September 2012, and traded little changed at 2,752 ringgit at 5:07 p.m. in Kuala Lumpur. Prices rose 3.4 percent last week.
Some areas of Brazil’s main soybean-growing state of Mato Grosso received 230 millimeters (9 inches) of rain in the past week, reducing the quality of beans and paring yields, AgRural, a researcher, said today. Crops in the area were also being damaged by fungal disease because of excess humidity in some areas, it said. Harvesting in the entire country was 30 percent complete compared with 21 percent last week and 27 percent a year ago.
“If the soybean crop is damaged, or the harvests may not come in as expected, that will provide some support for palm,” said Donny Khor, the deputy director of futures and commodities at RHB Investment Bank Bhd. in Kuala Lumpur. “If there is lower production, this will push prices in soybeans, and this will help to push prices in palm as well.”
Soybean oil, an alternative to palm in food and fuel uses, for delivery in May declined 0.2 percent to 41.14 cents a pound on the Chicago Board of Trade, while soybeans climbed as much as 1 percent to $13.74 a bushel, the highest price since Sept. 16.
The market was also supported as PT Pertamina, Indonesia’s state oil company, obtained supply of 2.4 million kiloliters of biodiesel, Khor said.
Refined palm oil for May delivery advanced 1.5 percent to close at 6,164 yuan ($1,011) a ton on the Dalian Commodity Exchange. Soybean oil rose 0.7 percent to end at 6,818 yuan.
