By Feiwen Rong
Dec. 1 (Bloomberg) -- Palm oil futures rose after gaining for the first month in five amid expectations that seasonal production may decline while demand from China may rise.
Palm oil production may fall from December to March during the annual low-output period, Vince Ng, analyst at Kaf-Seagroatt & Campbell Bhd., said today from Kuala Lumpur. Demand from China, the world’s largest buyer of palm oil, may rise ahead of the Lunar New Year in January, he added.
“The plantation companies that we talked to recently said they are seeing signs that production will slow down in the next couple of months,” Ng said. “Chinese demand is expected to pick up ahead of their largest festival.”
Palm oil for February delivery traded at 1,634 ringgit ($450) a metric ton on the Malaysia Derivatives Exchange at the 12:30 p.m. local time break after earlier gaining as much as 2.6 percent to 1,675 ringgit. It advanced 7.7 percent in November.
Soybean oil traded in Chicago fell as much as 0.9 percent to 32.61 cents a pound and was at 32.74 cents at 12:47 p.m. Singapore time in after-hours trading. Soybean oil is at a 62 percent premium to palm oil, Bloomberg data show.
Still, crude oil for January delivery in New York fell 2 percent to $53.36 a barrel at 12:58 p.m. Singapore time, dimming the allure of biofuels made from vegetable oils.
Sellers of palm oil also expressed concern that the ongoing credit crisis may affect buyers’ ability to get trade financing, Ng said.
“Palm oil may have some room to fall further,” Ng added.
To contact the reporter on this story: Feiwen Rong in Beijing at at frong2@bloomberg.net
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