SINGAPORE: Malaysian palm oil futures inched up on Tuesday on hopes a key industry report later this week could show a drop in stocks of the tropical oil, although concerns about rising output in the world’s second largest producer capped gains.
Industry regulator the Malaysian Palm Oil Board (MPOB) is due to release its June end-stocks and production report on Wednesday. A Reuters poll of five plantation companies pegged inventory levels at 1.74 million tonnes, down from 1.82 million tonnes a month ago and the lowest in a year.
But the poll also showed June production could rise by six per cent from May, the biggest increase so far this year, signalling a higher production cycle that is typically seen in the second half of the year may have started.
“All eyes are on MPOB at the moment and that’s why we see cautious trading before the data,” said a trader with a foreign commodities brokerage. “We are probably going to see higher production, so that could be limiting the price upside.”
By the mid-day break, the benchmark September contract on the Bursa Malaysia Derivatives Exchange had edged up 0.1 per cent to RM2,379 ringgit per tonne.
Total traded volumes stood at 9,475 lots of 25 tonnes each, below the usual 12,500 lots. Prices traded in a range of RM2,375 to RM2,387.
Technicals showed a bearish target at RM2,345 per tonne remains unchanged for Malaysian palm oil, as it has completed a rebound from the July 2 low of RM2,324, said Reuters market analyst Wang Tao.
Market participants will be looking forward to cargo surveyors’ export data for July 1-10 also on Wednesday, which could show higher shipments on last-minute buying ahead of the Muslim holy month of Ramadan.
In other markets, Brent crude dropped towards US$107 a barrel as investors locked in profits after prices climbed to a three-month top in the previous session and as worries about supply for the Middle East eased.
In vegetable oil markets, US soyoil for December was almost flat in early Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange edged up 0.1 per cent.– Reuters
Source : Business Times