Drop in soybean production sends palm oil prices up

on Friday, April 6, 2012

Drop in soybean production sends palm oil prices up Palm oil prices hit their highest levels in more than a year, as soybean inventories across the globe continued to decline.

Bloomberg reports that palm oil, used in food and fuel production, is becoming increasingly expensive. Firms throughout the globe are overhauling strategic sourcing as they contend with a drop in production, but rising prices could soon begin hitting shoppers, experts say.

CIMB Group Holdings analyst Ivy Ng told Bloomberg palm oil is "rising mainly on anticipation of bullish stock data and also on the back of the increase of soybean prices … people will buy in anticipation of that news as well as the lower soybean crop."

Stockpiles of palm oil in Malaysia fell 2.4 percent in March, according to estimates from analysts. Soybean production in Argentina and Brazil, two of the world's largest growers, is lagging behind prior estimates, further putting upward pressure on prices, experts said.

On the Chicago Board of Trade on Friday afternoon, soybean futures for May delivery climbed 1 percent to trade at roughly $14.50 per bushel. Prices have not touched such levels since last September, according to data from the trading hub.

 

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