Jakarta: Palm oil futures in Malaysia, the global benchmark, rose a second day after the Southeast Asian country said output this year may fall for the first time in nine years, raising concern about shortage.
Palm oil for November delivery on the Malaysia Derivatives Exchange rose 19 ringgit, or 0.77% to 2,490 ringgit ($709) a tonne at the midday.
Malaysia, the second largest supplier of the tropical oil, may produce 15.7 million tonnes this year, 1.3% lower than in 2006, Malaysia’s Finance Ministry said in its 2007-08 economic report.
Demand is rising in India, dwindling soybeans reserves, according to a report by Kotak Commodity Services. Palm oil is a substitute for soybean oil. India and China are the biggest consumers of both oils.
Soybean oil climbed a second day to 37.98 cents a pound in after-hours trading on the Chicago Board of Trade. Prices have risen 28% this year. Palm oil is trading on average 5.85 cents a pound cheaper than soybean oil since the year started.
Palm oil production typically picks up in the second half. August output rose to a year’s high, up 15% to 1.56 million tonnes from July, the Malaysian Palm Oil Board said, lifting stockpiles in Malaysia 11% to 1.45 million tonnes, the highest in six months.
The oil is used in cooking, cleaning agents and fuel additives.