Palm Futures Hit 33-Month Highs

MALAYSIAN

crude palm oil futures hit 33-month highs yesterday as hopes of

strong China demand and erratic weather helped shrug off Beijing’s

surprise interest rate hike.

China soyoil recovered some

losses, after dropping earlier in the day, on expectations that the

government would restock food staples next year and prospects of

stronger demand ahead of the Lunar New Year.

Traders said the

main driver for palm oil futures include heavy rains hurting yields and

disrupting harvesting in Malaysia and Indonesia as well as a dry spell

potentially cutting into South American soybean production.

“We are still in a weather market. Exports are down for palm oil and

China’s interest rate hike may limit the gains but no one can deny that

China’s economy and demand will expand next year,” said a trader with a

foreign brokerage in Malaysia.

“In fact, monetary tightening indicates a strong economy and demand cannot just die overnight if there is a hike.”

Benchmark

March 2011 palm oil on the Bursa Malaysia Derivatives Exchange rose as

much as 2.8 per cent to RM3,767 (US$1,217) per tonne, the highest since

March 14, 2008 and confirming an earlier Reuters technical analysis.

The contract settled at RM3,756. Traded volume almost doubled at 18,543 lots of 25 tonnes each.

Palm oil will rise to RM3,766 per tonne as an upward wave “3” is advancing, Reuters technical analysis showed.

Malaysian

palm oil exports for December 1-25 fell 23.9 per cent from the same

period a month ago, said cargo surveyor Intertek Testing Service, on

slower imports from India and China.

But some traders expect China to buy aggressively next year ahead of Lunar New year in early February.

Another

cargo surveyor Societe Generale de Surveillance reported a 23.7 per

cent drop for palm oil exports over the same period.

Source : Business Times

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