MARKET DEVELOPMENT
Palm Set for Biggest Monthly Gain in Three Years as Supply Drops
Palm Set for Biggest Monthly Gain in Three Years as Supply Drops
31/10/2013 (Bloomberg) - Palm oil rose to match an eight-month high, heading for the biggest monthly gain since 2010, on speculation that rain will disrupt harvests in Malaysia and as a low-production cycle starts next month.
The contract for delivery in January advanced as much as 1 percent to 2,573 ringgit ($816) a metric ton on the Bursa Malaysia Derivatives. That matched yesterday’s intraday peak, which was the highest level for most-active futures since February. Futures traded at 2,549 ringgit by 12:02 p.m. in Kuala Lumpur. Palm for physical delivery in November was at 2,540 ringgit yesterday, data compiled by Bloomberg show.
Prices are heading for a 9.9 percent gain this month, the most since December 2010, on expectation that the monsoon season that usually begins in November would slow production. While palm oil is produced year-round, output peaks from July to October in Malaysia, the world’s second-largest supplier.
“The adverse weather in Malaysia is likely to hamper production in the upcoming months it may cause some disruption to harvesting as well as complicate logistics,” Tan Chee Tat, an analyst at Phillip Futures Pte, said by phone in Singapore. “Because of the kicking in of the monsoon season and the end of the high-production cycle, we’re expecting production to slow.”
Isolated showers and thunderstorms are predicted over Sabah, Sarawak and Johor, the biggest palm oil producing states, according to a seven-day outlook on the Malaysian Meteorological Department’s website. The 14-day relative strength index for futures was at 73.8, the highest since Aug. 28. Some traders see readings above 70 as a sign that a drop is imminent.
Refined palm oil for May delivery lost 0.6 percent to 6,294 yuan ($1,033) a ton on the Dalian Commodity Exchange and soybean oil was unchanged at 7,214 yuan.
Soybeans for delivery in January were little changed at $12.7575 a bushel on the Chicago Board of Trade, while soybean oil for December fell 0.2 percent to 41.54 cents a pound.
The contract for delivery in January advanced as much as 1 percent to 2,573 ringgit ($816) a metric ton on the Bursa Malaysia Derivatives. That matched yesterday’s intraday peak, which was the highest level for most-active futures since February. Futures traded at 2,549 ringgit by 12:02 p.m. in Kuala Lumpur. Palm for physical delivery in November was at 2,540 ringgit yesterday, data compiled by Bloomberg show.
Prices are heading for a 9.9 percent gain this month, the most since December 2010, on expectation that the monsoon season that usually begins in November would slow production. While palm oil is produced year-round, output peaks from July to October in Malaysia, the world’s second-largest supplier.
“The adverse weather in Malaysia is likely to hamper production in the upcoming months it may cause some disruption to harvesting as well as complicate logistics,” Tan Chee Tat, an analyst at Phillip Futures Pte, said by phone in Singapore. “Because of the kicking in of the monsoon season and the end of the high-production cycle, we’re expecting production to slow.”
Isolated showers and thunderstorms are predicted over Sabah, Sarawak and Johor, the biggest palm oil producing states, according to a seven-day outlook on the Malaysian Meteorological Department’s website. The 14-day relative strength index for futures was at 73.8, the highest since Aug. 28. Some traders see readings above 70 as a sign that a drop is imminent.
Refined palm oil for May delivery lost 0.6 percent to 6,294 yuan ($1,033) a ton on the Dalian Commodity Exchange and soybean oil was unchanged at 7,214 yuan.
Soybeans for delivery in January were little changed at $12.7575 a bushel on the Chicago Board of Trade, while soybean oil for December fell 0.2 percent to 41.54 cents a pound.