Palm oil gained for a second day on speculation that exports from Malaysia will climb this month as importers stockpile to meet an increase in demand during the Muslim fasting month of Ramadan.
The contract for August delivery, with the biggest open interest, climbed as much as 0.8 percent to 2,458 ringgit ($785) a metric ton on the Bursa Malaysia Derivatives and ended the morning session at 2,448 ringgit. Futures fell 0.7 percent last week, the first such loss since the five days ended May 3. Palm for local physical delivery in July was at 2,430 ringgit on June 14, according to data compiled by Bloomberg.
Malaysia, the second-largest producer after Indonesia, left the tax on crude palm oil exports unchanged at 4.5 percent for a fifth month in July to boost shipments. Exports jumped 18 percent to 709,860 tons in the first 15 days of this month, surveyor Intertek said on June 15. Demand typically picks up ahead of Ramadan, which falls in July this year, when Muslims break day-long fasts with communal meals.
“Demand is continuously there, mainly for Ramadan,” Rajesh Modi, a trader at Sprint Exim Pte., said by phone from Singapore. “Suppose the market goes higher, then demand may slow down. Buyers may switch to soybean because soybean is coming down and palm oil is going up.”
Soybean oil’s premium over palm oil was at $264.97 a ton today compared with an average of $319 this year, according to data compiled by Bloomberg. The two edible oils are substitutes in food and fuel uses.
Soybean oil for December delivery fell 0.3 percent to 47.50 cents a pound on the Chicago Board of Trade, while soybeans for delivery in November declined 1 percent to $12.8575 a bushel.
Refined palm oil for January delivery climbed 0.7 percent to 6,264 yuan ($1,023) a ton on the Dalian Commodity Exchange, while soybean oil for delivery in the same month rose 0.3 percent to 7,630 yuan.
To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
Source : Bloomberg
