Palm Rises as Korea Clash Fears Ease

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.


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


“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.


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.


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


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

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