Palm Futures Close Off One-Week Highs

MALAYSIAN

crude palm oil futures ended off one-week highs yesterday, as China

unveiled plans to restock agriculture commodities at a time when erratic

weather globally may curb supplies.

US soyoil for January

delivery hit a 28-month high during Asian trade, as prospects of

growing China demand extended gains in a market already rising on

higher biofuel mandates in South America.

China said

Wednesday it will take a bigger role in importing food staples to shore

up reserves of soybeans and corn, which has boosted grains and spilled

over to vegetable oil markets.

Big buyers such as China are moving in at a time when hot weather may

curb soy and corn production in South America and rains have started

limiting palm oil output in Malaysia and Indonesia.

“The

weather story now includes a China story, which will see gains across

most the of the agricultural complex,” said a trader with a foreign

commodities brokerage.

“The cold weather in the US is also lifting commodities indirectly via crude oil’s rally above US$90 a barrel.”

Benchmark

March 2011 crude palm oil futures on the Bursa Malaysia Derivatives

ended up 1.1 per cent at RM3,658 after going as high as RM3,676, a

level unseen since December 15.

Traded volumes stood at 17,660 lots of 25 tonnes each compared to the usual 10,000 lots.

Palm oil is set for its best weekly

performance in December, as investors are increasingly favouring

agricultural commodities as an inflation hedge since food prices in

China and India have been high.

Source : Business Times

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