PALM oil futures climbed the most in more than two weeks yesterday after
concerns eased about an escalation in clashes between South and North
Korea, boosting commodity prices, and as soybean oil gained on dry South
American weather.
The February-delivery contract jumped 1.7
percent to 3,168 ringgit ($1,009) a metric ton on the Malaysia
Derivatives Exchange, the most since Nov. 9. January-delivery soybean
oil gained as much as 1.1 percent to 50.12 cents a pound in Chicago.
Two
South Korean soldiers were killed yesterday in the worst attack by
North Korea on its neighbor in at least eight months, driving stocks and
commodity prices lower. Palm oil fell to the lowest level in three
weeks after the clashes, and also dropped yesterday on concern that
China may reduce vegetable oil imports as it takes steps to cool food
prices.
“Concerns about Korea and China seem to have eased and fundamental
factors like weather and crop outlook seem to be in focus,” Ivy Ng, an
analyst at CIMB Investment Bank Bhd., said from Kuala Lumpur. “People
are still waiting to see if soybeans can emerge unscathed from the
weather woes in South America.”
Dry weather this week will
produce a two-month rainfall deficit of 7 inches (18 centimeters) across
fields in South America, according to T-Storm Weather. A La Nina
weather event has reduced soil moisture, the forecaster said.
Global
demand for eight vegetable oils including palm will be larger than
output for the first time in eight years in 2010- 11, according to a
Nov. 19 report from Oil World, which also said China’s import reliance
has reached “an alarming level.”
World output of vegetable oils
will rise 5.2 million tons to 143.17 million tons in the year that
started Oct. 1, while demand will climb 6.2 million tons to 143.9
million tons, it said. Palm oil, which has gained 29 percent over the
past year, fell 4.3 percent on Nov. 22 and 2.2 percent yesterday.
“People
might view current prices are reasonable after the recent decline and
may resume purchases to replenish stocks,” CIMB’s Ng said. “Chinese
steps to cool prices may be negative in the short term, but it will be
positive in the medium term as they will need huge imports to rebuild
reserves.”
China will sell soybeans and vegetable oil from
reserves starting this week, the State Administration of Grain said on
Nov. 19. Companies participating in state sales of vegetable oil cannot
buy more than 5,000 tons in a single purchase or volume that exceeds 30
days of usage, the National Grain & Oil Trade Center said on its
website today.
Source : Business Times
