MARKET DEVELOPMENT
Palm Surges to Highest Since September 2012 on Weather Concerns
Palm Surges to Highest Since September 2012 on Weather Concerns
03/03/2014 (Bloomberg) - Palm oil climbed to the highest level in more than 17 months on speculation that dry weather in the main palm and soybean growing areas may weaken prospects for global cooking oil production.
The contract for May delivery jumped as much as 2.1 percent to 2,860 ringgit ($873) a metric ton on Bursa Malaysia Derivatives, the highest level for futures since Sept. 20, 2012, and ended the morning session at 2,836 ringgit. Futures increased 9.6 percent last month, the most since October.
Dry weather may limit Indonesia’s increase in palm oil production in the first half, Martua Sitorus, executive deputy chairman at Wilmar International Ltd., said Feb. 21. The dry weather in Malaysia, which began in early February, may end in the middle or the end of March, according to the nation’s meteorological department. The two countries account for 86 percent of global palm oil output, according to the U.S. Agriculture Department.
“Investors have increased their bullish bets on the market driven by weather factors,” said Chee Tat Tan, an analyst with Phillip Futures Pte., by phone from Singapore. “The unfavorable weather in Latin America is likely to trim output of competing oils such as soybean oil.”
Global production of soybeans will be smaller than estimated a month ago after prospects deteriorated for harvests in Brazil and Argentina, the International Grains Council said Feb. 27. Farmers worldwide will harvest 284 million tons in the 2013-2014 season, 1.4 percent less than a January estimate of 288 million tons, it said.
Ukraine Tension
A surge in crude oil prices amid escalating tension between Ukraine and Russia boosted prospects for palm as biofuel feedstock, Tan said. West Texas Intermediate crude oil for April delivery rose 1.2 percent to $103.80 per barrel on the New York Mercantile Exchange.
“Crude oil prices have gone up because of the Ukraine effect and this may boost palm oil as it would raise biodiesel demand,” Tan said.
Soybeans for delivery in May climbed 0.5 percent to $14.2075 a bushel on the Chicago Board of Trade, extending gains of 1.7 percent on Feb. 28. Soybean oil rose 1.1 percent to 42.26 cents a pound.
Refined palm oil for September delivery advanced 1.5 percent to 6,306 yuan ($1,025) a ton on the Dalian Commodity Exchange. Soybean oil rose 1.6 percent to 6,928 yuan.
The contract for May delivery jumped as much as 2.1 percent to 2,860 ringgit ($873) a metric ton on Bursa Malaysia Derivatives, the highest level for futures since Sept. 20, 2012, and ended the morning session at 2,836 ringgit. Futures increased 9.6 percent last month, the most since October.
Dry weather may limit Indonesia’s increase in palm oil production in the first half, Martua Sitorus, executive deputy chairman at Wilmar International Ltd., said Feb. 21. The dry weather in Malaysia, which began in early February, may end in the middle or the end of March, according to the nation’s meteorological department. The two countries account for 86 percent of global palm oil output, according to the U.S. Agriculture Department.
“Investors have increased their bullish bets on the market driven by weather factors,” said Chee Tat Tan, an analyst with Phillip Futures Pte., by phone from Singapore. “The unfavorable weather in Latin America is likely to trim output of competing oils such as soybean oil.”
Global production of soybeans will be smaller than estimated a month ago after prospects deteriorated for harvests in Brazil and Argentina, the International Grains Council said Feb. 27. Farmers worldwide will harvest 284 million tons in the 2013-2014 season, 1.4 percent less than a January estimate of 288 million tons, it said.
Ukraine Tension
A surge in crude oil prices amid escalating tension between Ukraine and Russia boosted prospects for palm as biofuel feedstock, Tan said. West Texas Intermediate crude oil for April delivery rose 1.2 percent to $103.80 per barrel on the New York Mercantile Exchange.
“Crude oil prices have gone up because of the Ukraine effect and this may boost palm oil as it would raise biodiesel demand,” Tan said.
Soybeans for delivery in May climbed 0.5 percent to $14.2075 a bushel on the Chicago Board of Trade, extending gains of 1.7 percent on Feb. 28. Soybean oil rose 1.1 percent to 42.26 cents a pound.
Refined palm oil for September delivery advanced 1.5 percent to 6,306 yuan ($1,025) a ton on the Dalian Commodity Exchange. Soybean oil rose 1.6 percent to 6,928 yuan.