Palm oil swung between gains and losses on speculation that a narrowing discount to soybean oil will weaken demand for the commodity used in everything from noodles to biofuels.
The contract for delivery in February rose and fell at least 0.2 per cent and ended the morning session little changed at RM2,623 a metric tonne on the Bursa Malaysia Derivatives. Futures rallied to RM2,692 on November 22, the highest level for the most-active contract since September 2012, and extended the advance to 7.6 per cent this year.
The gain for palm oil means its discount compared to other plant oils has shrunk to the smallest in a long time, industry researcher Oil World said yesterday. The spread between palm and soybean oil, substitutes in food and fuel uses, was at about US$84 a tonne today, compared with an average of US$262 this year, according to data compiled by Bloomberg.
"Prices of both oils are looking more and more competitive, so there may be interests to switch between oils," said Arhnue Tan, an analyst at Alliance Investment Bank Bhd. Investors are awaiting price forecasts from an industry conference in Bandung, Indonesia, starting tomorrow, she said.
Soybean oil for January delivery gained 0.2 per cent to 40.68 cents a pound on the Chicago Board of Trade, paring losses this year to 18 per cent. Soybeans climbed 0.4 per cent to US$13.34 a bushel.
Refined palm oil for May delivery was little changed at 6,302 yuan (US$1,035) a ton on the Dalian Commodity Exchange. Soybean oil was also little changed at 7,242 yuan.
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