Quoted from Business Times, 03.8.2010;
PALM oil futures rose to the highest level in more than three months yesterday after reports showed that sales from Malaysia, the second-biggest producer, gained last month.October-delivery futures advanced as much as 2.1 per cent to RM2,570 a metric ton on the Malaysia Derivatives Exchange, the highest level since April 27, and traded at RM2,565 at 5.15 pm in Kuala Lumpur. Prices added 6.1 per cent in July, the biggest monthly gain in five.
Palm oil exports from Malaysia climbed 4.4 per cent in July to 1,412,300 tons from a month earlier, market surveyor Intertek said July 31. Rival Societe Generale de Surveillance said sales gained 4.7 per cent to 1,402,317 tons last month. Crude oil rose to the highest in four days as Asian stocks rallied after China’s manufacturing rose in July, increasing the appeal of palm oil as a biofuel feedstock. September-delivery crude oil added as much as 0.7 per cent to US$79.53 a barrel on the New York Mercantile Exchange.
“Everything seems to be supportive for palm oil today,” said Ryan Long, a trader at OSK Investment Bank Sdn Bhd. “Better- than-expected exports from Malaysia and higher crude are all pointing to a firm trend. The only negative is a strong ringgit.”The ringgit rose to a two-year high on optimism investors will pump more funds into Asian assets as regional economies lead the recovery from a global recession, raising the cost for palm oil buyers. The currency advanced as much as 1 per cent to 3.1514 per dollar in Kuala Lumpur, according to data compiled by Bloomberg.
La Nina, which brings above-normal rainfall in Asia, can disrupt palm oil production in Indonesia and Malaysia, the top growers, and cause dry weather in North America, hurting soybean crops. Palm and soybean oils are substitutes and account for more than 60 per cent of global edible oils supplies and demand. “It has been raining in Malaysia and that’s adding to some concern about future production outlook,” OSK’s Long said. December-delivery soybean oil jumped as much as 1 per cent to 40.94 cents a pound and the vegetable oil’s premium over palm oil narrowed to US$88.48 a ton from US$105.8 on July 30, according to Bloomberg data. November-delivery soybeans rallied as much as 1.4 per cent to US$10.19 a bushel, the highest since April 26.
CME Group Inc.’s October-delivery palm oil contract, pegged to the Malaysian benchmark price, jumped as much as 2.4 per cent to US$811 a ton, the highest since the contract started trading in May. On the Dalian Commodity Exchange, January-delivery palm oil surged 2.5 per cent to 6,910 yuan (US$1,020) a ton, while soybean oil added 2 per cent to 7,842 yuan a ton.
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