KUALA LUMPUR: Palm oil fluctuated as investors weighed the bullish impact of the relentless rally in global farm commodities with increasing stockpiles of the tropical oil in second-biggest grower Malaysia.
Futures in Kuala Lumpur fell as much as 0.3%, then climbed 1.1%, before paring gains by the midday break.
Chicago soybean oil advanced for the past three days and is near the highest level in 13 years.
“Palm oil is taking cues from firm soybean oil and farm commodity prices, ” said Rajesh Modi, a trader at Sprint Exim Pte in Singapore. While demand for palm oil is not strong, with Indian buying almost negligible in the past few days, supplies are not rising aggressively, he said.
Surveys for Malaysian palm oil supplies show that inventories are rising at a slower-than-expected pace, Modi said.
“It’s still at a comfortable level so it’s not alarming for the market, especially seeing that stocks in destination markets are very low.”
Malaysian reserves probably advanced to a five-month high of 1.50 million tons in April, according to a Bloomberg survey published Wednesday.
Crude palm oil production rose 9.2% to 1.55 million tons, the highest monthly amount since October, while exports climbed 10% to 1.30 million tons.
Soybean oil is the top performer on the Bloomberg Commodity Index as crude-oil refiners boost output of renewable diesel.
“Soy oil has gone from being just a byproduct for things like salad dressing to potentially leading the crush, ” according to Joe Lardy, an analyst at CHS Global Research. - Bloomberg