JAKARTA: Malaysian palm oil futures rose 2.6 per cent to their highest close in near eight weeks yesterday as investors shrugged off poor early-August exports and focused on lower palm oil stocks in July, a bullish factor for prices, traders said.
Palm prices correlate inversely with palm oil stocks.
Crude palm oil stocks at the world’s number 2 producer fell 5.67 per cent to 1,328,440 tonnes from a revised 1,408,317 tonnes in June, the Malaysian Palm Oil Board (MPOB) said, beating market expectations for a 3.7 per cent fall to 1.35 million tonnes.
“The bullish MPOB report with lower stocks suggested that end stocks in the coming months will be low,” said a trader at a Kuala Lumpur-based brokerage, adding that such expectation triggered short covering.
The trader said investors seemed to have ignored the exports data for the first 10 days of August as they believed that the decline was due to shipment delay.
“So in coming weeks exports could be better and the market expected a strong number for the full month of at least 1.45 million tonnes. Production is also slow in picking up,” the trader added.
The benchmark October contract Bursa Malaysia’s Derivatives Exchange settled up RM60
to RM2,400, a level last seen on June 16.
The benchmark contract earlier hit an intraday high of RM2,424, the highest in eight weeks. Overall volume was thin at 4,636 lots of 25 tonnes each, less than the usual 5,000 lots.
Cargo surveyors reported that exports of Malaysian palm oil products for August 1-10 fell up to 12.6 per cent to 366,352 tonnes from 419,100 tonnes shipped between July 1 and 10.
In the Malaysian physical market, palm oil for August delivery was traded at RM2,420-2,450
in the southern region and at RM2,410-2,440 in the central region. Source : Business Times