Palm Oil Climbs to Highest in More Than Two Months on Exports

By Luzi Ann Javier

Nov. 10 (Bloomberg) -- Palm oil advanced to its highest level in more than two months as exports from Malaysia, the world’s second-biggest producer, climbed 19 percent in the first 10 days of November.

Palm oil for January delivery added as much as 0.8 percent to 2,285 ringgit ($676) a metric ton on the Malaysia Derivatives Exchange, the highest price since Sept. 1, before trading at 2,270 ringgit by the 12:30 p.m. break.

Futures may increase to 2,400 ringgit a ton by the first quarter as demand from India and China, the biggest consumers, recovers and El Nino may hurt output next year, according to Dorab Mistry, director of Godrej International Ltd.

“Supply worries, a pickup in demand due to the Chinese New Year festivities, global economic recovery, a smaller domestic oilseed crop from India” and increased mandates for biofuel may push prices higher through the first quarter, Ivy Ng, an analyst at CIMB Investment Bank Bhd., said in a report.

Exports of palm oil from Malaysia jumped to 403,302 tons from Nov. 1 to Nov. 10 from 339,195 tons in the same period in October, independent market surveyor Intertek said today.

Global palm oil production, including output from Indonesia and Malaysia, will expand 6.2 percent to 46.5 million tons next year, compared with a four-year average growth rate of 8.4 percent, Ng said, citing estimates from Oil World, a global oilseed information provider.

El Nino, which can parch crops in Asia and cause flooding in South America, may increase palm oil supply worries, Ng said.

El Nino

“The current El Nino has so far brought a weaker monsoon to India and sub-par rainfall in Indonesia and Malaysia in July- to August,” Ng said. “The weather forecasters indicate that the most likely outcome for El Nino is to peak with at least moderate strength.”

Palm oil stockpiles in Malaysia climbed 25 percent to 1,974,462 tons in October from the previous month, the Malaysian Palm Oil Board said in a statement today after the market closed for midday. Output rose 27.4 percent to 1,985,055 tons and exports were up 11.8 percent to 1,478,317 tons.

Crude oil dropped 0.7 percent to $78.89 a barrel and soybean oil slipped 0.8 percent to 37.87 cents per pound.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net