By Claire Leow
June 23 (Bloomberg) -- Palm oil futures posted their best gain in seven weeks as soybean prices climbed and investors deemed four days of declines as excessive. JPMorgan & Co. also raised its palm oil price forecast by 17 percent.
Soybean oil is a substitute for palm oil, and changes in the price can influence trends in the tropical commodity. The most-active soybean futures contract in Chicago advanced as much as 1.5 percent, the first rise in four days.
“From now till February 2010, soybean supply is expected to remain tight,” Simone Yeoh of JPMorgan Securities (Malaysia) Sdn. and Aditya Srinath of PT JP Morgan Securities Indonesia wrote in a report received today by e-mail. Palm oil may average 2,450 ringgit, or $700, a metric ton for 2009-2010, up from an earlier forecast of 2,100 ringgit, or $600, the report said.
Palm oil for September rose as much as 5.3 percent to 2,271 ringgit ($641) a ton on the Malaysia Derivatives Exchange, and traded at 2,245 ringgit at 4:03 p.m. The price dropped 5.6 percent yesterday, taking losses over four days to 10 percent. Today’s intraday gain was the biggest since May 4.
Soybeans for November delivery traded at $9.93 a bushel at 4:22 p.m. Singapore time after rising by 12 cents. That lifted Chicago soybean oil for December delivery by 1.2 percent to 37.17 cents a pound.
There’s “limited downside risk in crude palm oil prices,” the JPMorgan report said. “Even on expectations of higher U.S. soybean plantings in the upcoming June 30 U.S. Department of Agriculture report, the U.S. harvest is not expected to be sufficient to alleviate the tight inventory.”
To contact the reporter for this story: Claire Leow in Singapore at cleow@bloomberg.net
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