Palm Oil Climbs on Prospects for More Demand as Inventory Drops

By Swansy Afonso

Palm oil climbed, recovering from the lowest level in more than a week, on speculation that demand for commodities may rise on improved economic prospects as stockpiles decline inMalaysia, the second-biggest producer.

The contract for July delivery rose as much as 0.9 percent to 2,282 ringgit ($749) a metric ton on the Bursa Malaysia Derivatives and traded at 2,267 ringgit at 12:10 p.m. in Kuala Lumpur. Futures are headed for a 2.1 percent drop this week.

The European Central Bank cut borrowing costs to a record yesterday, while saying monetary policy “will remain accommodative for as long as needed.” Reserves in Malaysia dropped to a seven-month low of 2.17 million tons in March as exports advanced, according to Malaysian Palm Oil Board data.

“People are confident that the ECB’s move would bring more liquidity in the market, the economic prospects could improve and generally improve commodities demand,” Ivy Ng, an analyst at CIMB Investment Bank Bhd., said by phone from Kuala Lumpur. “This combined with the expectation that stockpiles in Malaysia will decline is aiding prices.”

Traders are waiting for further cues from the Malaysia Palm Oil Board’s April supply and demand data due next week, said Chung Yang Ker, an analyst at Phillip Futures Pte.

Soybeans for July delivery rose 0.5 percent to $13.785 a bushel on the Chicago Board of Trade. Soybean oil climbed 0.5 percent to 48.73 cents a pound. Soybean oil’s premium over palm was at $329.46 a ton today, according to data compiled by Bloomberg.

Refined palm oil for September delivery rose 1 percent to 5,892 yuan ($957) a ton on the Dalian Commodity Exchange. Soybean oil advanced 0.8 percent to 7,240 yuan a ton.

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

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