Palm oil prices in Malaysia, the global benchmark, rose to a record on Wednesday as global demand for vegetable oils for food and alternative fuel outstrips supply. Oilseeds and vegetable oils are gaining from Chicago to Dalian on concern world inventories are dwindling as demand rises in China and India and governments subsidize the use of edible oils for fuel. Soybeans may lead gains among non-energy commodities next year, according to Goldman Sachs Group Inc.
Soybean and soybean oil in China, the biggest consumer of the commodity, also soared to a record on Wednesday as traders speculated demand may outpace supplies from government stockpile sales and imports. Soybeans in Chicago reached a 34-year peak and soybean oil the highest for at least 33 years on 24 December.
“The outlook for the grain, oilseed and vegetable oil markets remains very positive,” Michael Coleman, Singapore-based managing director of Aisling Analytics Pte, which runs a $1 billion commodity hedge fund, said by email.
“To see significantly lower prices, we’ll need a combination of demand rationing and excellent harvests to allow a rebuilding of inventories,” he said. “That probably means significantly higher prices first.”
Palm oil for March delivery rose 50 ringgit, or 1.7%, to 3,080 ringgit ($922) a tonne on the Malaysia Derivatives Exchange on Wednesday, and traded at 3,078 ringgit a tonne by the midday break in Kuala Lumpur. Agricultural products have been among the best performing commodities this year.
Palm oil has gained 56%, soybeans 75% and soybean oil 62%. Goldman Sachs raised its 12-month forecast for soybeans by 61% to $14.50 a bushel from $9 a bushel in a report 11 December.
China, the biggest buyer of vegetable oils, imported 29% more of the commodities in the first 11 months of this year compared with a year earlier, customs data showed on the same date.
Imports of vegetable oil totaled 7.71 tonne from January to November, the Beijing-based customs office said. Palm oil imports gained 7.1% in the same period.
Indonesia and Malaysia grow 90% of the world’s palm oil. Palm oil is the main substitute for soybean oil.