Palm Extends Rally, Climbs to 3-Month High

PALM oil futures rose to the highest level in more than three months

yesterday after reports showed that sales from Malaysia, the

second-biggest producer, gained last month.

October-delivery

futures advanced as much as 2.1 per cent to RM2,570 a metric ton on the

Malaysia Derivatives Exchange, the highest level since April 27, and

traded at RM2,565 at 5.15 pm in Kuala Lumpur. Prices added 6.1 per cent

in July, the biggest monthly gain in five.

Palm oil exports from

Malaysia climbed 4.4 per cent in July to 1,412,300 tons from a month

earlier, market surveyor Intertek said July 31. Rival Societe Generale

de Surveillance said sales gained 4.7 per cent to 1,402,317 tons last

month.

Crude oil rose to the highest in four days as Asian stocks rallied after

China’s manufacturing rose in July, increasing the appeal of palm oil

as a biofuel feedstock. September-delivery crude oil added as much as

0.7 per cent to US$79.53 a barrel on the New York Mercantile Exchange.

“Everything seems to be supportive for palm oil today,” said Ryan Long, a trader at OSK Investment Bank Sdn Bhd.

“Better-

than-expected exports from Malaysia and higher crude are all pointing

to a firm trend. The only negative is a strong ringgit.”

The

ringgit rose to a two-year high on optimism investors will pump more

funds into Asian assets as regional economies lead the recovery from a

global recession, raising the cost for palm oil buyers. The currency

advanced as much as 1 per cent to 3.1514 per dollar in Kuala Lumpur,

according to data compiled by Bloomberg.

La Nina, which brings

above-normal rainfall in Asia, can disrupt palm oil production in

Indonesia and Malaysia, the top growers, and cause dry weather in North

America, hurting soybean crops.

Palm and soybean oils are substitutes and account for more than 60 per cent of global edible oils supplies and demand.

“It has been raining in Malaysia and that’s adding to some concern about future production outlook,” OSK’s Long said.

December-delivery

soybean oil jumped as much as 1 per cent to 40.94 cents a pound and the

vegetable oil’s premium over palm oil narrowed to US$88.48 a ton from

US$105.8 on July 30, according to Bloomberg data.

November-delivery soybeans rallied as much as 1.4 per cent to US$10.19 a bushel, the highest since April 26.

CME

Group Inc.’s October-delivery palm oil contract, pegged to the

Malaysian benchmark price, jumped as much as 2.4 per cent to US$811 a

ton, the highest since the contract started trading in May.

On

the Dalian Commodity Exchange, January-delivery palm oil surged 2.5 per

cent to 6,910 yuan (US$1,020) a ton, while soybean oil added 2 per cent

to 7,842 yuan a ton.

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