Palm Oil Has Third Weekly Gain, Closes Near Three-Month High

By Claire Leow and Yoga Rusmana

Jan. 9 (Bloomberg) -- Palm oil futures in Kuala Lumpur had a third week of gains, trading near a three-month high on optimism Malaysian stockpiles may fall from a record as production slows and demand increases.

“Recent strength in crude palm oil is supported mainly by increased demand ahead of the Lunar New Year,” said Fordyanto Widjaja, an analyst at Morgan Stanley Research Asia Pacific in a report today.

March-delivery palm oil climbed 3 percent to 1,920 ringgit ($542) a ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Futures gained 10 percent for the week, the most in five weeks, reaching as high as 2,058 ringgit, the highest since Sept. 30.

China, the world’s largest consumer of vegetable oils, marks the lunar New Year at the end of this month when families travel to reunite and share communal meals. Shipments from Malaysia, the second-largest producer of palm oil, climbed 25 percent to 1.65 million tons in December from November, the most in three months, surveyor Intertek said Jan. 2. Exports to China rose between Dec. 26-31, according to surveyor Societe Generale de Surveillance.

Malaysia’s palm oil stocks climbed to a record 2.27 million tons in November. The nation’s palm oil board usually reports the data on or after the 10th of each month.

Palm oil is the cheapest cooking oil. Soybean oil traded in Chicago is 48 percent more expensive than Malaysian palm oil, according to Bloomberg data.

Soybean Oil

Soybean oil for March delivery gained 1.5 percent to 36.30 cents a pound in electronic, after-hours trading on the Chicago Board of Trade at 5:59 p.m. Singapore time.

Palm oil futures on the Dalian Commodity Exchange for May delivery closed 2.3 percent higher at 5,496 yuan ($804) a ton, for a 10 percent gain this week. Dalian soybean oil gained 1.6 percent to 6,456 yuan a ton, or 6.3 percent higher for the week.

The Indonesian state marketing center only sold 1,000 tons of 5,500 tons offered to PT Tunas Baru Lampung at 6,369 rupiah a kilogram ($583 a ton) from Panjang port in Lampung province.

PT Astra Agro Lestari failed to sell 8,000 tons of palm oil in tender due to low bids. It set target price of 6,445 rupiah for shipments from Medan.

“We set the target price based on the price in Malaysia,” said Tjahyo Dwi Arianto, head of investor relations. “Still buyers thought it was too high.”

Aziz Kahar, the center’s head of sales, said demand is not too good and buyers have significant inventory.

To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net; Yoga Rusmana in Jakarta at yrusmana@bloomberg.net