Palm set for biggest monthly gain in three years as supply drops

Business & Markets 2013
Written by Bloomberg
Thursday, 31 October 2013 13:07
A + A - Reset
31 Oct 2013 - 12:06pm
(Oct. 31): Palm oil rose to match an eight- month high, heading for the biggest
monthly gain since 2010, on speculation that rain will disrupt harvests in
Malaysia and as a low-production cycle starts next month.
The contract for delivery in January advanced as much as 1 percent to 2,573
ringgit ($816) a metric ton on the Bursa Malaysia Derivatives. That matched
yesterday’s intraday peak, which was the highest level for most-active futures
since February. Futures traded at 2,549 ringgit by 12:02 p.m. in Kuala Lumpur.
Palm for physical delivery in November was at 2,540 ringgit yesterday, data
compiled by Bloomberg show.
Prices are heading for a 9.9 percent gain this month, the most since December
2010, on expectation that the monsoon season that usually begins in November
would slow production. While palm oil is produced year-round, output peaks
from July to October in Malaysia, the world’s second-largest supplier.
“The adverse weather in Malaysia is likely to hamper production in the
upcoming months it may cause some disruption to harvesting as well as
complicate logistics,” Tan Chee Tat, an analyst at Phillip Futures Pte, said by
phone in Singapore. “Because of the kicking in of the monsoon season and the
end of the high-production cycle, we’re expecting production to slow.”
Isolated showers and thunderstorms are predicted over Sabah, Sarawak and
Johor, the biggest palm oil producing states, according to a seven-day outlook
on the Malaysian Meteorological Department’s website. The 14-day relative
strength index for futures was at 73.8, the highest since Aug. 28. Some traders
see readings above 70 as a sign that a drop is imminent.
Refined palm oil for May delivery lost 0.6 percent to 6,294 yuan ($1,033) a ton on the Dalian Commodity Exchange and soybean oil was
unchanged at 7,214 yuan.
Soybeans for delivery in January were little changed at $12.7575 a bushel on the Chicago Board of Trade, while soybean oil for
December fell 0.2 percent to 41.54 cents a pound.