Palm oil headed for a second monthly advance on speculation that production in Indonesia, the world’s largest supplier, may decline this year as weather curbs yields.
The contract for delivery in February was little changed at 2,653 ringgit ($822) a metric ton on the Bursa Malaysia Derivatives at the midday break in Kuala Lumpur, after climbing to 2,656 ringgit yesterday, the highest price at close since September 2012. Futures rose 2.3 percent this month, poised for the first annual increase in three years.
Palm output in Indonesia will drop 1.9 percent to 26.5 million tons this year, according to the median of five grower estimates compiled by Bloomberg. That’s the first decline since 1998, according to data from the U.S. Department of Agriculture, which sees a 28.5 million ton crop.
“The uncertainties over Indonesia’s palm oil production are lending support to prices,” said Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services in Mumbai. “There may be some temporary bullishness but when prices come close to the 2,700 ringgit psychological mark, it will be met with a lot of resistance.”
Refined palm oil for May delivery gained 0.3 percent to 6,334 yuan ($1,040) a ton on the Dalian Commodity Exchange. Soybean oil climbed 0.3 percent to 7,272 yuan.