Palm oil at 1-year high on China demand

Palm oil gained to the highest level in more than a year on speculation that buying from China, the biggest user of cooking oils, may increase when local markets reopen tomorrow after a three-day holiday.

June-delivery palm oil rose as much as 1.2 per cent to RM3,574 (US$1,167) a metric ton on the Malaysia Derivatives Exchange, the highest for a most-active contract since March 9 last year, and was at RM3,555 by 12:29 p.m. local time.

“There may be some further buying from China,” said Rajesh Modi, a trader at Singapore-based Sprint Exim Pte. Traders may be anticipating palm oil on the Dalian Commodity Exchange will open higher tomorrow, he said.

Financial markets in China were closed from April 2 for public holidays. Palm oil advanced 2.9 per cent in the two days ended yesterday after a US government survey showed soyabean acreage in the world’s largest producer will decline. Palm oil and soyabean oil are substitutes in food and fuel uses.

Traders were expecting “Dalian to catch up tomorrow,” Ryan Long, vice president of futures and options at OSK Holdings Bhd, said by phone from Kuala Lumpur. “Speculators are taking early positions today, perhaps.”

Soyabeans for May delivery were unchanged at US$14.1675 a bushel on the Chicago Board of Trade. Prices surged 16 per cent in the first quarter, the most since the end of 2010, after dry weather reduced output in South America. Soyabean oil for delivery in May gained 0.4 per cent to 56.10 cents per pound. -- Bloomberg