Palm oil rebounded from the biggest decline this year on speculation that dry weather in Brazil will probably limit supplies of soybeans, crushed to yield an alternative cooking oil.
The contract for May delivery climbed as much as 0.9 percent to 2,845 ringgit ($868) a metric ton on Bursa Malaysia Derivatives and ended morning session at 2,840 ringgit. Prices fell 1.8 percent yesterday, the most at close since Dec. 13.
Futures jumped to the highest level since September 2012 this week after data showed that output in Malaysia dropped last month to the lowest since April 2012 and as a dry spell sweeping most of Southeast Asia threatened to hurt palm oil production later this year.
“It’s rising not only because of droughts in Indonesia and Malaysia but also because of the drought in Brazil,” said Arhnue Tan, an analyst at Alliance Investment Bank Bhd. “There are potential supply constraints for soybeans this year.”
Brazilian soybean growers will harvest less than previously estimated after low rainfall and high temperatures harmed crops. The production estimate for the 2013-2014 season was cut to 85.4 million tons from last month’s 90 million-ton forecast, agricultural agency Conab said yesterday.
Soybean oil for delivery in May fell 0.2 percent to 43.35 cents a pound on the Chicago Board of Trade, while soybeans were little changed at $13.8725 a bushel.
Refined palm oil for September delivery fell 0.7 percent to 6,394 yuan ($1,042) a ton on the Dalian Commodity Exchange. Soybean oil declined 0.1 percent to 7,150 yuan.
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Source : Bloomberg