Palm Oil Futures Rally Above 3-Month Low

PALM oil futures rallied from the lowest level in more than three

months yesterday as crude oil gained before a US Energy Department

report forecast to show refinery operating rates increased and gasoline

inventories fell.

August-delivery palm oil rose 0.8 per cent to

RM2,445 a metric ton on the Malaysia Derivatives Exchange to end a

three-day losing streak. Vegetable oils track crude oil as they can be

used in biofuels.

Crude oil in New York rebounded as much as 2.7

per cent to US$71.99 a barrel, the first increase in six days, and last

traded at US$71.87 a barrel.

The contract fell to less than US$70 a barrel Monday for the first time

since February 5 on concerns that European nations’ debt-cutting

measures will slow the economic recovery and reduce demand.

“Softening

crude oil prices” had put pressure on palm oil and the gains in palm

oil today are “most definitely crude-oil related,” said Arhnue Tan, a

senior analyst at ECM Libra Capital Sdn Bhd.

Palm oil for January

delivery on the Dalian Commodity Exchange gained 1.3 per cent to 6,590

yuan a ton. Soybean oil gained 0.9 per cent to 7,542 yuan. China is the

largest consumer of vegetable oils.

Palm oil exports from

Malaysia, the second-largest producer, advanced 23 per cent to 591,887

tons in the first 15 days of May, compared with the same period in

April, led by China, market surveyor Intertek said on May 15.

Shipments

to China rose 38 percent to 161,700 tons for the period, the data

shows.

Palm oil in Malaysia has dropped 8.2 per cent since the

year started amid concern over record soybean crops. That has helped to

narrow the premium of soybean oil over palm oil to US$65.82 a ton from

US$119.21 when 2009 ended, according to Bloomberg data.

A

stronger ringgit has also narrowed the premium. The Malaysian currency

has gained 6.7 per cent since the year started.

Source : Business Times

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