Palm oil at 6-week high on Brazil drought

Brazil , Commodities , Food , Malaysia , Palm oil , Soybaens Feb 13, 2014 No Comments

Palm oilThe price of palm oil is at a six-week high, on speculation of an increase in overseas  demand due to fears of a soybeans supply shortage. Investors indeed fear that the low soybean production due to the Brazil drought, the largest producer, will lead regular users of soybean oil to replace it with palm oil.

In Kuala Lumpur (Malaysia), the reference market for palm oil,  April delivery rose as much as 0.7 percent to $798 a ton.

Soybeans for delivery in May climbed 0.6 per cent to $13.17 a bushel on the Chicago Board of Trade. The March-delivery soybean oil contract rose 0.3 per cent to 39.09 cents a pound, strengthening for a fourth day. “Concerns about the dry weather in Brazil are still there, so it has helped to support soybean oil prices, and indirectly palm oil as well,” said Kenanga Investment Bank analyst Alan Lim.

Palm oil stocks in Malaysia fell to 1.93 million tonnes in January after rising for the past six months, industry data showed, due to seasonally slowing output in the world’s second-largest grower. “We know that end-stocks are slowing down, and the market is confident that exports will be better than last month,” said a trader with a foreign commodities brokerage.

“We expect inventories to decline to 1.88 million tonnes in February. Although we expect exports to go down due to shorter calendar days, the decline in production will be more,” said Kenanga investment Bank analyst Alan Lim.

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

Leave a Reply

Your email address will not be published. Required fields are marked *