Malaysian crude palm oil futures gained 1.7 per cent yesterday after investors were heartened by prospects of higher festival demand and stabilising commodity markets following the previous day’s sell-off.
Benchmark November palm oil futures on the Bursa Malaysia Derivatives Exchange settled up RM40 to RM 2,375 per tonne, bouncing off 10-day lows hit on Monday.
“Palm, along with the other vegetable oil markets, was oversold. Good US soybean supply for oil crushing is a concern from autumn onwards but there is growing festival demand to consider first,” said a trader with a local commodities broker.
Confirmation by the US Department of Agriculture of near-record soybean harvests coming this autumn sent grain and some vegetable oil prices lower last week and weakened markets earlier this week. But new export interest by China for soybeans or a slide in the dollar could still buoy prices, traders say.
Palm oil’s gains were supported by strong festival demand, starting with the Muslim fasting season of Ramadan late in August and ending with China’s Mid-Autumn festival and the Hindu festival of Diwali in October.
“China and India’s consumption should surpass the US and European Union combined by 2010, while another 1 billion African consumers are keen to join the global economy,” CLSA analyst Willianto Ie told clients in a research note. “Even a pick-up in harvests (vegetable oils) might not be enough to replenish stocks.”
Source : Business Times