Jan. 2 (Bloomberg) -- Palm oil closed near the highest level in more than three weeks after capping its first annual gain in three years amid speculation inventories in Malaysia probably dropped in December for the first time in four months.
The contract for March delivery ended at 2,648 ringgit ($806) a metric ton on the Bursa Malaysia Derivatives. Prices settled at 2,659 ringgit on Dec. 31, the highest level at close since Dec. 6, posting a 9.1 percent annual increase.
“Some traders are taking profits because prices have been rising for the past few weeks,” said Benny Lee, a market strategist at Jupiter Securities Sdn.
Stockpiles in Malaysia, the second-largest producer, gained 7.2 percent to 1.98 million tons in November from a month earlier, according to the Malaysian Palm Oil Board. While that was the third straight monthly increase, reserves were 23 percent lower than a year earlier, showed data from the MPOB, which is scheduled to release figures for December on Jan. 10
“We are bullish on palm oil prices because we think production should decline 10 percent in December while exports only dropped 3 percent,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. “This should lead to the first decline in inventory levels in four months.”
Exports dropped 3.3 percent to 1.42 million tons last month from November, SGS (Malaysia) Sdn. said on Dec. 31. Production is typically lowest in January and February because of growing cycles, while exports decrease during the Northern Hemisphere winter as the tropical oil clouds in cooler temperatures.
Soybean oil for March delivery rose 0.4 percent to 39.13 cents a pound on the Chicago Board of Trade on Dec. 31. Soybeans fell 1.2 percent to $12.925 a bushel.
Refined palm oil for May delivery gained 1.8 percent to close at 6,148 yuan ($1,016) a ton on the Dalian Commodity Exchange. Soybean oil climbed 1.1 percent to end at 6,922 yuan.
--Editor: Thomas Kutty Abraham