Palm oil, used in everything from candy bars to instant noodles, will advance 3.4 per cent to the highest in more than a year by June as cooking oil supplies drop to the lowest in more than three decades, a survey showed.
The tropical oil will gain to 3,500 ringgit (Dh4,213) a metric tonne from 3,385 ringgit at the close on the Malaysia Derivatives Exchange Wednesday, according to the median estimate in a Bloomberg survey of ten analysts and traders who attended a conference in Kuala Lumpur last week.
Inventories of palm, soybean, rapeseed and six other oils will drop below 30 days of consumption this year, the fewest since 1977, US Department of Agriculture data show. Global food prices rose for a second consecutive month in February on higher costs for cereals, cooking oils and sugar, as shown by the index of 55 food items tracked by the United Nations' Food and Agriculture Organisation.
"The stocks-to-usage ratio is going to be much lower this year, so that will boost prices," said Sandeep Bajoria, chief executive officer of Sunvin Group, a Mumbai-based commodities trader, who predicts a high of 3,700 ringgit.
Futures climbed as high as 3,395 ringgit yesterday, the most expensive since June 6. Prices have gained 6.6 per cent this year compared with a 0.9 per cent advance in the Standard & Poor's GSCI Agriculture Index of eight commodities. The commodity last reached 3,500 ringgit in March last year.