MALAYSIAN crude palm oil rose 1.9 per cent yesterday, recovering from a near three-week low earlier in the session on talk of lower production in a key growing region. But fears of an export slowdown persisted, limiting gains, traders said.
Benchmark November palm oil futures on the Bursa Malaysia Derivatives Exchange fell as much as RM67 to RM 2,234 per tonne, a level unseen since August 3, but recovered slightly to settle up RM44 at RM2,324.
“The southern plantations in mainland Malaysia for the first 20 days in August have reported up to a 7 per cent decline in production and the market perked up,” said a trader with a local commodities brokerage.
In July, mainland Malaysia produced 945,860 tonnes of palm oil, of which at least 70 per cent comes from Johor and Pahang states, traders said and industry data showed.
Another trader said Asian festival demand appeared to lose momentum after cargo surveyors the previous day reported up to 10.7 per cent declines to 815,208 tonnes for August 1-20 from the same period a month before.
Initially traders expected festivals starting with the Muslim fasting season of Ramadan in late August to lift demand and draw down palm oil stocks in the world’s no 2 supplier of the vegetable oil.
Middle East buyers have covered much of their requirements for Ramadan and traders said there is little sign that India and China, which celebrate Diwali and Mid-Autumn festivals, have been buying in a big way, traders said.
Oil edged above US$73 a barrel after reversing an earlier surge to a seven-week high, but provided little support for some vegetable oil markets which follow energy prices due to their increasing use as a biofuel feedstock.
Source : Business Times