Palm oil futures surged to the highest level in more than 26 months, tracking gains in soybeans, which rallied for a second day after the U.S. Department of Agriculture forecast a smaller global crop.
The contract for delivery in December jumped as much as 6.5 percent to 2,940 ringgit ($948) a metric ton, the highest level since Aug. 1, 2008, on the Malaysia Derivatives Exchange. Prices gained for a sixth consecutive week last week, the longest winning streak since a seven-week advance ending May 8, 2009.
The U.S. soybean crop will be a record 3.408 billion bushels (92.8 million tons), compared with 3.483 billion projected in September and 3.359 billion gathered last year, the USDA said on Oct. 8. August rains failed to boost yields, prompting the government to reduce its acreage estimates.
“Crude palm oil prices may be ripe for a further upswing given the USDA’s recent downgrade of soybean crop estimates and the threat to oilseeds and edible oil supplies posed by the ongoing
La Nina,” Ivy Ng, an analyst at CIMB Investment Bank Bhd., said in a report today.
The brokerage raised its forecast for crude palm oil prices by 9 percent to an average 2,630 ringgit a ton this year and as much as 14 percent to 2,800 ringgit for 2011. The price has averaged 2,502 ringgit this year, according to Bloomberg calculations.
Soybean futures for November delivery in Chicago gained as much as 4.4 percent to $11.8475 a bushel in Chicago, the highest price since June 5 last year. The contract traded at $11.775 a bushel at 9:06 a.m. in Mumbai.
Malaysian Exports
December-delivery soybean oil gained as much as 2.2 percent to 47.64 cents a pound in Asia, the highest level since Sept. 29, 2008. Soybean oil and palm oil are direct substitutes.
Malaysia’s palm oil exports fell 0.4 percent in the first 10 days of October to 395,015 tons from the same period in September, independent market surveyor Intertek said today.
On the Dalian Commodity Exchange, palm oil for delivery in May jumped as much as 5.6 percent to 8,184 yuan ($1,226) a ton, the highest level since Aug. 4, 2008. Dalian May-delivery soybean oil surged as much as 4.5 percent to 8,918 yuan.
CME Group Inc.’s December palm oil contract, pegged to the Malaysian benchmark price, surged as much as 5.4 percent to $938.25 a ton, the highest level since the exchange began trading the commodity in May.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net;
To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net
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