Palm oil climbed to a five-week high as soybeans rallied on concern that dry weather in the US may hurt crops in the largest grower of the oilseed crushed to make an alternative oil.
The contract for November delivery gained as much as 1.3 per cent to RM2,340 a metric tonne on the Bursa Malaysia Derivatives, the highest level for the most-active contract since July 12, and ended the morning session at RM2,338. Palm for physical delivery in September was at RM2,380 on August 16, according to data compiled by Bloomberg.
Soybeans in Chicago extended the best weekly advance in more than a year as the US government cut its forecast for the 2013 harvest after excessive rains in May and June reduced planted acreage and damaged yields. Dry weather is expected to continue across the west-central Midwest for the next 10 days and moisture shortages and stress will build for soybeans and corn, MDA Information Systems LLC said in an August 16 report.
“The current weather conditions in the US, which is driving soybean oil prices up, will have a positive spillover effect on palm oil prices because soybean oil is a close substitute to palm oil,” said Sim Han Qiang, an analyst at Phillip Futures Pte in Singapore. “When soybean oil prices increase, it tends to put buying pressure on crude palm oil.”
Soybean oil’s premium over palm oil gained to US$253.24 a tonne today from US$245.82 on August 16, according to data compiled by Bloomberg. Soybean oil for delivery in December rose 1.3 per cent to 43.73 cents a pound on the Chicago Board of Trade. Soybeans for November advanced two per cent to US$12.8425 a bushel. The most active contract advanced 6.5 per cent last week, the steepest gain since the five days ended July 20, 2012.
Refined palm oil for January delivery advanced 0.6 per cent to 5,644 yuan (US$923) a tonne on the Dalian Commodity Exchange. Soybean oil prices increased 0.8 per cent to 7,244 yuan a tonne.– Bloomberg
Source : Business Times
