KUALA LUMPUR: Palm oil gained for a second day on speculation that stockpiles in Malaysia, the second-largest supplier after Indonesia, may have declined in May to the lowest level in more than a year.
The August-delivery contract advanced 1.3% to close at 3,003 ringgit ($944) a metric ton on the Malaysia Derivatives Exchange. Futures dropped 17% from a 13-month high of 3,628 ringgit on April 10 as Europe’s financial crisis worsened.
Stockpiles fell 3.8% to 1.78 million tons in May compared with the previous month, reaching the lowest level since April 2011, according to the median in a Bloomberg survey of three plantation companies and two analysts.
While production increased 6.3% to 1.35 million tons on month, output was 22% below last year. Exports rose 4.5% to 1.39 million tons. Official data are due for release on June 11.
“Since there’s no more negative news from the Europe side, players are moving back their focus to the fundamentals,” said Ryan Long, vice president of futures and options at OSK Holdings Bhd. in Kuala Lumpur. “The market is oversold and we’re seeing a retracement of the U.S. dollar.”
The Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners, fell 0.3% to 82.564. Palm oil dropped 11% last month as Europe’s debt crisis worsened the outlook for edible-oils demand.
Soybeans for November delivery advanced 0.9% to $12.8825 a bushel on the Chicago Board of Trade. Soybean oil for July gained 1.4% to 49.16 cents a pound. Palm oil and soybean oil are both used in foods and fuels.
Palm oil for January delivery climbed 0.5% to close at 7,742 yuan ($1,217) a ton on the Dalian Commodity Exchange. Soybean oil for January advanced 0.8% to 9,124 yuan. (Bloomberg/T07)