09/12/2010 (Bloomberg) - Palm oil prices may climb 11 percent to the highest level in almost three years on increased imports by China and as dry weather hurts soybean planting in Argentina, according to Govindlal G. Patel, director of GGN International.
Futures may advance to as much as 4,000 ringgit ($1,272) a metric ton by March, Patel said in an interview from Rajkot in western India. A seasonal decline in output in Malaysia, the second-biggest producer, will contribute to the gains, he said.
Palm oil has rallied 36 percent this year, headed for its second straight annual advance, on optimism that rising demand in China may strain global supplies curbed by rain and drought in producing nations. Global demand for eight vegetable oils will exceed output for the first time in eight years in 2010- 2011 and China’s import reliance is at “an alarming level,” Oil World said in a Nov. 19 report.
“China, I believe, is already buying large quantities to rebuild stockpiles and prices will stay firm,” said Patel, who has been trading vegetable oils for more than three decades. “The already-low inventories will be drawn down further.”
February-delivery futures rose as much as 1.3 percent to 3,640 ringgit, a 29-month high, and traded at 3,617 ringgit at 12:13 p.m. on the Malaysia Derivatives Exchange.
China, the biggest user of commodities, has pledged to control prices by cracking down on the use of bank credit to speculate in agricultural markets and by selling soybeans and vegetable oil from state reserves.
The biggest buyer of soybeans is expected to import 57 million tons in the year from Oct. 1, up 13 percent from a year ago, the U.S. Department of Agriculture data show. Imports may exceed 14.2 million tons from October through December, up 4 million tons from a year earlier, Oil World said this week.
La Nina
Heavy rains caused by a La Nina weather event have reduced oil-palm yields in Indonesia and Malaysia, the top producers. La Nina has also caused drought that curbed South American planting of soybeans, threatening global edible oil supplies and driving prices higher. Malaysia’s production dropped 1 percent to 14.3 million tons in the first 10 months of the year, according to data from the nation’s palm oil board.
“The yield and quality of palm oil output in Malaysia will be affected because of excess rain,” said Patel. “The increase in output next year won’t be sufficient to meet demand.”
Soybean output in Argentina, the third-biggest shipper, may decline to 52 million tons in the year starting April 1 from an estimated 54.5 million tons this year, the Foreign Agricultural Service said in a report on Dec. 6. Exports may fall to 11.5 million tons from 14.7 million tons, according to the report
“While concerns about weather in Brazil have eased, the Argentine soybean crop is still under threat from dry weather,” Patel said.
Palm Oil Exports
Do you know if any rain fall is near Buenos AIres, i am spending some days here and the heat is too much, at the hotel downtown buenos aires they install an air condition in muy room because i was suffering the climate.
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