Palm oil climbs to 18-month high as Malaysian reserves decline

by **Cals** Mon 10 Mar 2014, 19:29

Business & Markets 2014

Written by Bloomberg

Monday, 10 March 2014 17:18

(Mar 10): Palm oil advanced to the highest level in almost 18 months after production in Malaysia dropped to the lowest since April 2012, depleting stockpiles in the world’s second biggest supplier to an eight-month low.

The contract for May delivery gained as much as 0.7 percent to 2,907 ringgit ($885) a metric ton on Bursa Malaysia Derivatives, the highest level since September 2012, and was at 2,893 ringgit at 4:46 p.m. in Kuala Lumpur. Price rose 3.1 percent last week, posting a fifth weekly advance, the longest run since June.

Inventories fell 14 percent to 1.66 million tons from a month earlier, the lowest level since June, the Malaysian Palm Oil Board said today. This was the biggest drop since February 2009. The median of estimates in a Bloomberg survey was 1.8 million tons for reserves. Output fell 15 percent to 1.28 million tons, while exports lost 1.3 percent to 1.35 million tons, the lowest since July 2012, board data shows.

“The data is good for prices because stockpile and production data came in lower than expectations,” Hariyanto Wijaya, an analyst at PT Mandiri Sekuritas, said by phone from Jakarta. Output may be lower due to the lagged effects of a drought in May to June last year, he said.

Refined palm oil for September delivery declined 0.4 percent to close at 6,418 yuan ($1,045) a ton on the Dalian Commodity Exchange. Soybean oil dropped 0.5 percent to end at 7,160 yuan.

Soybean oil for delivery in May was little changed at 44.35 cents on the Chicago Board of Trade, while soybeans fell 0.6 percent to $14.49 a bushel.