Palm oil advances to one week high, driven by rising demand from China

PALM oil climbed to the highest level in more than a week on rising demand from China, the second largest importer, amid speculation that a delay in soybean planting in the US will lower global cooking oil supplies.

The contract for July delivery advanced as much as 1.5 per cent to RM2,294 (US$771) a metric tonne on the Bursa Malaysia Derivatives, the highest price for the most active contract since April 30, and ended the morning session at RM2,289 ringgit in Kuala Lumpur.

Futures, down 6.1 per cent this year, reached RM2,230 on May 6, the lowest price since December 13.

China imported 770,000 tonnes of vegetable oils in April, the customs agency said. That compared with 700,000 tonnes in March and 510,000 tonnes a year ago, according to Bloomberg data.

Global palm oil exports were forecast to climb to 43.6 million tonnes in 2012 to 2013 from 40.4 million tonnes in 2011 to 2012, Hamburg-based researcher Oil World said.

Chinese purchases and gains in soybeans were boosting palm oil, Donny Khor, deputy director of futures and commodities at RHB Investment Bank Bhd, said by phone from Kuala Lumpur.

“The US weather and the delay in soybean planting are also supporting prices.”

About two per cent of soybeans in the US were planted as of May 5, down from 22 per cent last year and the five-year average of 12 per cent, the Department of Agriculture said. Farmers who planted soybeans after collecting wheat might not be able to plant oilseeds this year because of the harvest delays.

Soybeans for July delivery gained 0.5 per cent to US$13.8875 a bushel on the Chicago Board of Trade. Soybean oil climbed 0.5 per cent to 49.37 cents a pound.

Refined palm oil for September delivery gained 1.4 per cent to 5,988 yuan (US$975) a tonne on the Dalian Commodity Exchange. Soybean oil for same month delivery climbed 0.5 per cent to 7,396 yuan a tonne. — Bloomberg