PALM oil advanced for a fourth week yesterday to the highest level in more than three months on signs the global demand for edible oils continues to strengthen. February-delivery palm oil, the most active contract, was little changed at RM2,482 a ton on the Malaysia Derivatives Exchange, the highest close since August 13. Futures have risen 12 per cent in the four-week rally. The market is closed today for a Muslim holiday.
“The uptrend is intact,” said Ben Santoso, a plantation analyst at DBS Vickers Securities (Singapore) by phone. “Any decline is not significant. It is a slight correction on the way up. Palm is well supported relative to soybean oil.” Soybean oil for January delivery rose 2.2 per cent to close at 40.99 cents a pound on Wednesday, the most in seven days and the highest level since October. 3, 2008. Soybeans gained 0.8 per cent to US$10.545 a bushel, the highest price since June 12. The market is closed for the Thanksgiving holiday. Soybean oil is trading at a premium of US$172.80 a ton to palm oil, higher than the year-to-date average of US$164.17 a ton, according to Bloomberg data. “The differential implies people will be switching out of soybean oil to palm,” said Santoso. “People are buying palm oil as a cheaper source of edible oil.” “If the Chinese were to stock up more ahead of the Chinese New Year and if India’s soybean harvest is short, then they need to source more palm oil in the coming weeks and months,” Santoso said. “Exports are expected to pick up.” Earlier, palm oil futures climbed as much as 1.6 per cent to RM2,521, pushing the relative strength index above the 70 level where traders tend to place sell orders. “Profit-taking has been the main market feature for the palm oil futures today ahead of the long weekend,” said Ryan Long, a trader at OSK Investment Bank in Kuala Lumpur, said by email. “Many feel that the market is over-bought.” With “supply still abundant,” buyers are cautious and the gain may be capped at RM2,520, according to technical charts, he added. Palm oil inventories, now at 10-month highs, will “limit price gains” until the first quarter, said Sunaina Dhanuka, a plantation analyst at Macquarie Research. The Malaysian Palm Oil Board’s data November 10 showed October output jumped 27 per cent to a record 1.99 million tons, lifting stockpiles to a 10-month high. Source : Business Times]]>