Bloomberg News

Palm Oil Advances as Soybeans Jump Most in Six Months on Supply

January 14, 2013

Palm oil gained after soybeans surged the most in more than six months yesterday on signs that U.S. stockpiles are tightening, increasing concerns that global oilseed supplies may dwindle.

The contract for delivery in March advanced as much as 1.8 percent to 2,413 ringgit ($803) a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur, before trading at 2,399 ringgit at 11:03 a.m. in Kuala Lumpur.

Soybeans rallied 3.3 percent in Chicago yesterday, the most at close since July 5, after a U.S. Department of Agriculture report on Jan. 11 showed inventories fell 17 percent from a year earlier to 1.966 billion bushels as of Dec. 1, the lowest in nine years. Exporters sold 120,000 tons to China, the world’s biggest consumer, the USDA said yesterday.

“Over the immediate period, we should see prices recovering because of the oncoming production down-cycle for palm oil which is expected to ease inventory,” said Arhnue Tan, an analyst at Alliance Investment Bank Bhd. in Kuala Lumpur. “This could add to concerns over soybean supply shortage.”

Production in Malaysia, the largest grower after Indonesia, usually peaks in October and November before tapering off. Output this year may match the all-time high of 18.9 million tons recorded in 2011, Choo Yuen May, director-general of the Palm Oil Board said yesterday. Production totaled 18.8 million tons in 2012 while stockpiles reached a record of 2.63 million tons in December, data from the board showed.

Refined palm oil for delivery in May increased 0.5 percent to 6,734 yuan ($1,082) a ton on the Dalian Commodity Exchange. Soybean oil for May rose 1 percent to 8,618 yuan a ton.

Soybeans for March delivery fell 0.2 percent to $14.15 a bushel on the Chicago Board of Trade. Soybean oil for delivery in March advanced 0.3 percent to 50.62 cents a pound, extending yesterday’s 2.5 percent rise at the close.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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