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Palm oil surges to new high on supply woes
KUALA LUMPUR - Malaysian palm oil surged to a record high on Wednesday, gaining close to 2%, as surging demand for food and fuel amid fears of falling production raised concerns about the supply outlook next year. And traders said prices of palm oil, used in products ranging from cosmetics and confectionaries to biodiesel, could rise further early next year as fears of reduced soya plantings in the United States lift soybean prices to 34-year highs."It is mainly soybean oil which is pushing up the market and crude oil is also inching up,” said a trader with a domestic brokerage. By the midday break, the benchmark March contract on the Bursa Malaysia Derivatives Exchange was up 48 ringgit at 3,078 ringgit ($923) a tonne. Minutes before that, it hit 3,080 ringgit, surpassing the previous high of 3,068 ringgit it hit in November. And in the physical market, crude palm oil for December and January shipments in the southern region was quoted at 3,070/3,080 ringgit a tonne.
Trades were done between 3,050 and 3,070 ringgit.
Palm oil has risen more than 50% so far this year, while soya oil prices have surged close to 62%. World vegetable markets are getting increasingly jittery about securing enough US soyabean acres next spring after a short crop in 2007 as it competes with corn, demand for which is surging because of the country’s insatiable appetite for ethanol. Also adding to the woes are recent floods in Malaysia and tightening supplies in the physical market.
“We expect things should get better in the coming days but as of now the supply is still very tight,” one trader said from Johor, a key palm oil producing state in southern Malaysia.
The market also ignored bearish Malaysian palm oil export data from leading cargo surveyors. “Exports are down but I think soyabean oil is a big factor and the market is kind of ignoring the export numbers,” another trader said. Cargo surveyor Intertek Testing Services said Malaysian palm oil exports during Dec. 1-25 fell 0.8 percent to 1,117,521 tonnes from 1,126,683 tonnes shipped between Nov. 1 and 25. Another cargo surveyor, Societe Generale de Surveillance, is due to release its numbers later on Wednesday.
Source: The Economic Times
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