Palm oil advances to 17-month high as Malaysian exports expand

KUALA LUMPUR, Feb 21 — Palm oil climbed to a 17-month high on speculation that rising exports from Malaysia, the world’s biggest producer after Indonesia, will reduce stockpiles.

The contract for May delivery advanced 1.7 per cent to RM2,755 a metric ton on the Bursa Malaysia Derivatives, the highest price since September 2012. The biggest jump in futures since November 21 extended gains to 3.6 per cent this year.

Palm oil rallied from a three-year low in July on prospects for increased local and overseas demand, and on concern that dry weather may curb production in some areas of Indonesia and Malaysia. The two countries represent about 90 per cent of global supplies, U.S Department of Agriculture data show. Exports from Malaysia rose 17 per cent to 875,091 tons in the first 20 days of this month from the same period in January, Intertek said yesterday.

“Rising exports from Malaysia is good news,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank. Stockpiles in Malaysia will probably shrink to 1.8 million tons by the end of this month from 1.93 million tons at the end of January, he said.

“On top of favorable export demand, domestic palm oil consumption in Indonesia and Malaysia is likely to stay strong,” Oversea-Chinese Banking Corp. said in a report yesterday. “The seasonally lower production in the early part of the year has been contributing to stronger palm oil prices.”

The commodity may trade at an average RM2,700 a ton in 2014, the Singapore-based bank said. Palm oil averaged RM2,416.6 in Kuala Lumpur last year, according to data compiled by Bloomberg.

Soybean oil for delivery in May rose as much as 1.6 per cent to 41.16 cents a pound on the Chicago Board of Trade, the highest level since November 25, amid concern that drought in Brazil may hurt supply. Soybeans rose 0.5 per cent to US$13.4875 a bushel, taking its climb this year to 4.3 per cent.

Refined palm oil for May delivery rose 0.4 per cent to CN¥6,100 a ton on the Dalian Commodity Exchange. Soybean oil advanced 0.2 per cent to CN¥6,810. — Bloomberg