Palm oil surges to highest since March after US slashes soy area
03/07/2023 (The Edge Malaysia), Bangkok/Kuala Lumpur - Palm oil jumped more than 5% to inch closer to RM4,000 a ton after a US acreage report showing smaller-than-expected soybean plantings shocked crop markets and sent prices of soybean oil surging.
Futures in Kuala Lumpur climbed as much as 5.4% to RM3,994, the highest intraday level since March 15, before closing at RM3,985. The tropical oil is tracking Chicago soybean oil, its closest substitute for use in food and fuel, which extended gains after surging 7.3% Friday (June 30).
Prices are climbing on the acreage report, a slower pace of Malaysian palm oil production in June, continuing geopolitical tensions and a weaker ringgit, said Paramalingam Supramaniam, a director at Selangor-based broker Pelindung Bestari. “The rally certainly has more legs” with a weakening ringgit, he said.
The US Department of Agriculture on Friday reported that soybean plantings this year were down 5% from a year earlier to the lowest since 2020 as farmers shifted to corn. The country’s soybean acreage was at 83.5 million acres as of June 1, well below estimates for 87.7 million.
The smaller soy supply in the world’s second-biggest grower signals tighter availability of beans to crush into oil, which would shift demand to palm oil.
Still, price gains could be capped by profit-taking as well as sluggish palm oil exports in July, Paramalingam said.
Malaysia’s shipments fell 6.9% in June from a month earlier, according to Intertek Testing Services, with lower purchases from Europe, Africa and the Middle East. Another surveyor AmSpec Agri reported exports rose just 0.6% for the period to 1.09 million tons. - Bloomberg