Palm oil in biggest monthly gain since April

 

CPO FUTURES

PALM oil had its biggest monthly advance since April yesterday, paring a decline on the day, as prices in China surged on speculation that drought in South America may reduce global
vegetable oil supplies.

Planting of soybeans in Argentina has been delayed because of adverse weather, according to the Argentine Association of Regional Agricultural Experimentation Consortia. The country is
the largest exporter of soybean oil, a substitute for palm oil.

February-delivery contract lost 0.4 per cent to RM2,472 a metric ton on the Malaysia Derivatives Exchange amid concern potential losses from Dubai World, a state holding company with US$59 billion of liabilities, may spread. The most- active futures contract advanced 12 per cent this month. Trading resumed yesterday after a public holiday on November 27. Palm oil closed at the highest level in more than three months the previous day.

September-delivery palm oil rose 3.5 per cent, the biggest one-day gain in more than three months, to close at 6,756 yuan (US$989) a ton on the Dalian Commodity Exchange.

The premium of soybean oil in Chicago over palm oil in Malaysia, the benchmarks, averaged US$173.55 a ton in November, higher than the year-to-date average of US$163.98 a ton,
according to Bloomberg data.

“If you look at the price of soybean oil and palm oil, the gap is expanding,” providing support for palm oil, the cheaper alternative, Ben Santoso, a plantation analyst at DBS Vickers Securities (Singapore) Pte, said by phone yesterday.

Soybean oil for January delivery in Chicago, the benchmark, rose as much as 0.8 per cent to 40.85 cents a pound and traded at 40.57 cents at 6.19 pm Singapore time. Soybeans gained as
much as 1.2 per cent to US$10.66 a bushel to the highest since August 13.

Traders are seeking clues from November palm oil exports, said Ryan Long, a trader at OSK Investment Bank in Kuala Lumpur, by e-mail. Preliminary data was conflicting.

Malaysia’s palm oil exports rose 1.8 per cent in November to 1.46 million tons compared with the previous month, estimated Societe Generale de Surveillance, an independent cargo
surveyor.

Shipments fell 0.3 per cent in November to 1.42 million tons from the previous month, another surveyor Intertek said.

Official data normally comes from the country’s palm oil board on the 10th of each month.

Exports had gained 12 per cent in October to 1.48 million tons, it said November 10.

The “Dubai issue provided a good excuse to take profit” after November’s rally, Long said. A level of “RM2,420 is a correction target.”

The Central Bank of the United Arab Emirates said yesterday it “stands behind” the country’s lenders, allowing them to borrow money for half a percentage point above three-month local
interest rates.


RUBBER

THE Malaysian rubber market closed firmer yesterday over tight supply concerns arising from the current monsoon weather, dealers said.

They said natural rubber output in major producing countries of Thailand and Malaysia were affected by the continuous rainy season which has prompted concerns over supply shortages.

Against this backdrop, they expect SMR 20 rubber to breach the 900 sen per kilo mark this week.

At noon, the Malaysian Rubber Board official physical price for tyre-grade SMR 20 was up 12 sen at 889.5 sen per kilo while latex-in-bulk added 8.5 sen to 566 sen per kilo.

The unofficial closing price for tyre-grade SMR 20 was 4.5 sen higher at 894 sen per kilo while latex-in-bulk gained three sen to 569 sen per kilo.


TIN

TIN price on the Kuala Lumpur Tin Market (KLTM) ended unchanged at US$15,050 a tonne yesterday on steady-buying demand.

A dealer said the local market bucked the lower trend on the London Metal Exchange (LME) which saw the metal erasing US$200 to end at US$14,900 a tonne on Friday.

" The LME was down on profit-taking after a strong end-of-the-month buying," he said.

At the opening level on the KLTM, bids totalled 83 tonnes against offers for 88 tonnes.

The day's turnover rose to 83 tonnes from 80 tonnes on Friday with interest from Japanese, European and local traders.

The price differential between the KLTM and the LME expanded to US$435 per tonne versus US$235 previously. - Agencies