MUMBAI: Palm oil gained, trimming the biggest weekly decline this year, on speculation that demand for cooking oils will climb as dry weather in South America lowers soybean supplies and global inventories.
The July-delivery contract gained as much as 0.5% to 3,395 ringgit or US$1,118 a metric ton on the Malaysia Derivatives Exchange and ended the morning session at 3,386 ringgit in Kuala Lumpur. Futures are down 3.4% this week, the biggest five-day loss since November.
Malaysia’s palm oil exports rose 9.4% to 1.35 million tons in April compared with 1.23 million tons the previous month, surveyor Intertek said April 30.
Rising demand for US soybeans may cut the nation’s stockpiles to 215 million bushels by Augustus 31, smaller than the 250 million bushels estimated by the USDA last month, according to the average estimate of analysts surveyed by Bloomberg. Soybean oil competes with palm oil for use in food and fuels.
“China will still be a good buyer of US soybeans and demand will remain consistent in near term,” Ryan Long, vice president of futures and options at OSK Holdings Bhd., said by phone from Kuala Lumpur. “Some festive demand for palm oil will start by end of this month as buyers stock up for Ramadan.”
Consumption of food staples and cooking oils usually climbs during the Muslim fasting month as followers break daylong fasts with communal meals. Ramadan starts in July this year.
Futures may still fall as Malaysian production is seen climbing and US soybean planting gathers pace, Chung Yang Ker, an analyst at Phillip Futures Pte., said from Singapore.
Palm oil output gained 2.1% to 1.21 million tons in March from 1.19 million tons in February, the Malaysian Palm Oil Board said on April 10. The board is scheduled to release official data for April on May 10.
Soybeans for July delivery gained 0.2% to US$14.765 a bushel on the Chicago Board of Trade. (Bloomberg/T03/aph)
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