Business Times

Thursday – April 30, 2009

Palm oil futures in Malaysia rose, extending a six-month rally, on concern the swine flu outbreak may curb soybean oil supplies, and as better-than-expected Japanese output fuelled optimism the global economy is recovering.

The World Health Organisation raised its global pandemic alert to level 5, the second highest, saying the disease is no longer containable and global contagion is possible. The virus has been confirmed in nine nations.

Soybean oil, the main substitute for palm oil, could be in short supply if the flu leads to culling of pigs, paring demand for animal feed and curbing crushing, analysts say.

“If pigs are slaughtered, crushing of soybeans will drop and there will be a shortage of soybean oil, which is not a negative impact on palm oil,” said Ben Santoso, an analyst at DBSVickers Securities (Singapore).

July-delivery palm oil added as much as 3.1 per cent to RM2,480 (US$717) a metric ton on the Malaysia Derivatives Exchange before pausing at RM2,540 at the midday break in trading. Futures have gained 63 per cent in six months.

Japan’s industrial output gained for the first time in six months and at twice the pace predicted by economists, indicating the economy may resume expanding as soon as this quarter. Asian stocks rose, putting a global benchmark index on course for its best month in two decades.

Soybean oil for July delivery gained a second day, gaining 1.7 per cent to 36.35 cents a pound on the Chicago Board of Trade in after-hours trading at 1:06 pm Singapore time.

In China, the world’s largest consumer of pork and cooking oils, soybeans for January-delivery gained 2.2 per cent to 3,381 yuan (US$495) a ton at the 11:30 pm trading break.

September-delivery soybean oil surged 4.3 per cent to 7,024 yuan a ton and palm oil for September delivery rose 4.5 per cent to 6,310 yuan a ton. – Bloomberg

Bookmark to