Palm Oil Rebounds From 10-Month Lows on Gains in Soybean Oil

By Feiwen Rong

Aug. 13 (Bloomberg) -- Palm oil futures in Malaysia advanced for the first day in four, from a 10-month low, on gains in the price of soybean oil, its main competitor.

Palm oil, used in food and biofuels, often tracks the performance of soybean oil. Soybean oil also climbed for the first day in four, rising 1.2 percent to 51.40 U.S. cents a pound at 1:20 p.m. Singapore time in after-hours electronic trading on the Chicago Board of Trade.

``Palm oil is up because soybean oil prices advanced above 50 cents a pound,'' Kan Heen Sing, trader at HLG Futures Sdn., said by phone from Kuala Lumpur today. ``But sentiment is mixed as crude oil seems to be unsteady and may decline further.''

Palm oil for October delivery gained 1.3 percent to 2,595 ringgit ($784) a metric ton on the Malaysia Derivatives Exchange. The contract fell to 2,561 ringgit yesterday, the lowest since October 2007. The tropical oil has slumped 42 percent from its March 4 record.

Stockpiles in Malaysia, the second-largest producer of the commodity, dropped 2.8 percent in July as exports picked up, led by demand from China. They reached a record 2.04 million tons in June, according to the Malaysian Palm Oil Board.

Exports in the first 10 days of August were 23 percent higher than the same period last month, Societe Generale de Surveillance, an independent cargo surveyor, has estimated. A separate report by Intertek showed a 15 percent increase.

``Strong global demand for palm oil, especially from developing countries, is expected to continue,'' Franky Widjaja, chairman and chief executive officer at Golden Agri-Resources Ltd., a unit of Indonesia's biggest oil-palm grower, said at a press conference yesterday.

Demand for biodiesel ``acts as a floor'' for palm oil prices provided that the price of crude oil remains high, Widjaja said.

To contact the reporter for this story: Feiwen Rong in Singapore at Frong2@bloomberg.net