By Claire Leow
June 23 (Bloomberg) -- Palm oil futures had their best gain in more than two months as soybean prices climbed and investors deemed four days of declines as excessive. JPMorgan & Co. also raised its palm oil price forecast by 17 percent.
Soybean oil is a substitute for palm oil, and changes in the price can influence trends in the tropical commodity. The most-active soybean futures contract in Chicago advanced as much as 1.5 percent, the first rise in four days.
“From now till February 2010, soybean supply is expected to remain tight,” Simone Yeoh of JPMorgan Securities (Malaysia) Sdn. and Aditya Srinath of PT JP Morgan Securities Indonesia wrote in a report received today by e-mail. Palm oil may average 2,450 ringgit, or $700, a metric ton for 2009-2010, up from an earlier forecast of 2,100 ringgit, or $600, the report said.
Palm oil for September rose 6 percent to 2,286 ringgit ($644) a ton on the Malaysia Derivatives Exchange. The price dropped 5.6 percent yesterday, taking losses over four days to 10 percent. Today’s gain was the biggest since April 14.
Soybeans for November delivery gained 1.3 percent to $9.9325 a bushel at 6:06 p.m. Singapore time. That lifted Chicago soybean oil for December delivery by 1.5 percent to 37.28 cents a pound.
There’s “limited downside risk in crude palm oil prices,” the JPMorgan report said. “Even on expectations of higher U.S. soybean plantings in the upcoming June 30 U.S. Department of Agriculture report, the U.S. harvest is not expected to be sufficient to alleviate the tight inventory.”
U.S. stockpiles of soybeans are likely to be at their lowest since 1977 by the end of the crop year, the U.S. Department of Agriculture said June 10. U.S. stockpiles on Aug. 31 will total 110 million bushels, down from a May forecast of 130 million and the year-earlier total of 205 million, it said.
Latin America Beans
Brazil will harvest 57.1 million tons of soybeans, less than the May 7 forecast of 57.6 million tons and down from last year’s crop of 60 million tons, the country’s Agriculture Ministry said this month. Argentina, experiencing its worst drought in more than four decades, may harvest 31.9 million tons of soybeans this year, 31 percent below the last harvest, the Rosario Board of Trade said on June 12.
The three countries are the largest producers of soybeans, crushed for meal for animal feed and oil for food and fuel.
To contact the reporter for this story: Claire Leow in Singapore at cleow@bloomberg.net
Last Updated: June 23, 2009 07:12 EDT
