MUMBAI: Palm oil advanced after the biggest weekly decline in more than five months prompted some investors to buy the commodity and on concerns that dry weather in the US may hurt the soybean crop.
The August-delivery contract gained as much as 1.2% to 3,133 ringgit or US$1,001 a metric ton on the Malaysia Derivatives Exchange and traded at 3,123 ringgit at the close of the morning session in Kuala Lumpur.
Futures slid 5.5% last week, the most since the five days ended November 25. Palm oil’s so-called 14-day relative-strength index reached 26.28 on May 18, below the level of 30 that may indicate a rebound.
Unusually warm, dry weather over the next two weeks will increase stress on US corn and soybean crops that already lack sufficient subsoil moisture for optimal growth, Charles Sernatinger, a vice president for ABN Amro Clearing LLC, said yesterday.
Soybean oil and palm oil are both used in foods and fuels. Malaysia’s palm oil exports rose 2.1% to 862,337 tons in the first 20 days of May from the same period in April, Intertek said on May 19.
"The palm oil market had taken a heavy breakdown for the past one week and is technically oversold at the moment," Chung Yang Ker, an analyst at Phillip Futures Pte., said by phone from Singapore.
Palm oil for September delivery gained 1.6% to 8,100 yuan or US$1,281 a ton on the Dalian Commodity Exchange. (Bloomberg/T03/TW)