Palm Hits 1-Week High on Recovery Hope

JAKARTA: Malaysian crude palm oil (CPO) futures hit a one-week intraday high by midday today, moving in line with other commodities and stock markets on recovery hopes, traders said.

“The market was mainly driven by soybean and crude oil but I also think longer term, the palm market is still bullish,” said a trader at a Kuala Lumpur-based commodities brokerage.

U.S. soybean futures jumped more than 2 percent on Monday, oil rose above US$74 a barrel, trading near a 10-month high, and Asian stocks jumped more than 2 percent.

The rally has been boosted by upbeat U.S. housing data and optimistic comments from Federal Reserve Chairman Ben Bernanke on the health of the U.S. economy, which raised hopes for an economic recovery.

Benchmark November palm oil futures on the Bursa Malaysia Derivatives Exchange settled up RM45, or 1.9 percent, to RM2,390 (US$681.69) per tonne, after rising as high as RM2,402, a level not seen since Aug. 14.

Overall volume was double the usual, at 10,490 lots of 25 tonnes each.

In the Malaysian physical market, palm oil for August and September delivery was traded at RM2,450 in the southern and central regions.

Traders said they are expecting palm fundamentals to remain bullish because of lower palm oil output, and because of falling stocks among major producers and millers due to the fact that many harvesters stop work during the Eid al-Fitr holiday next month, marking the end of the Ramadan fasting month.

Investors, however, may be tempted to lock in some profit later today if news leaks out about Malaysian palm oil exports for the first 25 days of August, data which is due out on Tuesday, traders said.

They said the 25 days number may show a decline from the previous month, based on the fact that exports for the first 20 days was lower. However, investors are not so worried about weaker exports because the level of stocks is still likely to remain low on falling output. Source : Business Times

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