Palm oil advanced for the first time in six days on speculation recent declines to a five-week low may increase demand for the tropical commodity.

Futures in Malaysia fell 10 per cent in the past five days and yesterday reached their lowest level since July 30. Prices slumped on concern a record U.S. soybean harvest may increase bean oil output and erode demand for palm oil. The world’s two most-consumed edible oils are used in food and to make biofuel.

“It’s just a technical correction,” said Merlissa Paramitha Trisno, an analyst at PT Mandiri Sekuritas in Jakarta. Forecasts of a bumper U.S. soybean harvest will keep capping palm oil prices, she said.

November-delivery palm oil climbed as much as 1.6 per cent to RM2,163 (US$616) a ton on the Malaysia Derivatives Exchange and traded at RM2,154 as of midday local time. The contract fell 3.1 per cent yesterday after trading as low as RM2,125.

The soybean harvest in the U.S., the world’s top producer and exporter of the oilseed, will be a record 3.304 billion bushels, the Linn Group said Sept 4, exceeding the 3.199 billion forecast by the U.S. Department of Agriculture. About 2.959 billion bushels were collected last year.

The researcher, brokerage and asset manager’s estimates are based on surveys of customers, field observations and satellite data. The USDA will issue its second survey-based crop forecasts on Sept 11.

Soybeans for November delivery in Chicago fell as much as 10.5 cents to US$9.105 a bushel, the lowest price since July 29, and traded at US$9.2025 at midday Singapore time. Bean oil for December delivery gained 0.4 per cent to 34.39 cents a pound. The U.S. market was closed yesterday for the Labor Day holiday. – Bloomberg Source : Business Times

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