Palm Oil Advances as Prices Near Two-Year Low Prompt Buying

By Claire Leow

Oct. 14 (Bloomberg) -- Palm oil rose a second day as prices near two-year lows attracted buyers who'd been delaying purchases.

Palm oil for December delivery gained as much as 67 ringgit, or 3.7 percent, to 1,902 ringgit ($545) a metric ton on the Malaysian Derivatives Exchange. It dropped 11 percent last week to the lowest since November 2006 and at yesterday's close had lost 59 percent from a March peak.

The steep drop ``led to real buyers waiting on the sidelines in anticipation of lower prices,'' said Ong Chee Ting, an analyst at Aseambankers Malaysia Bhd.


The futures are ``near a bottom'' as production levels in Malaysia fell sooner than usual this half, according to OSK Research Sdn. They rebounded yesterday on a rally in crude oil prices and as Indonesia and Malaysia, the biggest producers, signaled changes to export policies.

Palm oil is used mainly for cooking and also in the production of biofuels, tracking the price of fossil fuels.

Crude oil, which soared to a record $147.27 a barrel July 11, has slumped 43 percent since then. It rose a second day, gaining 2.9 percent to $83.54 a barrel at 11:06 a.m. Singapore time in after-hours trading in New York.

Palm oil for January delivery in Dalian rose for the first time in seven days, reaching the daily limit of 5 percent to 5,350 yuan ($784) a ton.

To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net