Malaysian palm oil futures rose to near three-month highs on Tuesday as demand for the tropical oil spiked ahead of a Muslim holy festival, raising investors’ expectations that stocks in the No.2 producer will ease further.
Exports of Malaysian palm oil in the first half of June surged as much as 19 per cent as buyers stocked up for Ramadan in July. During Ramadan, communal feasting typically drives up consumption of the vegetable oil.
“We are moving into the festive season and demand is expected to pick up from Pakistan, India and the Middle East,” said a trader with a foreign commodities brokerage.
“Production is not coping with the exports, so traders expect end-stocks to go down further in June,” he added.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange had climbed 0.7 per cent to RM2,480 per tonne by the mid-day break, the highest level since March 25.
Total traded volumes stood at 16,049 lots of 25 tonnes each, higher than the usual 12,500 lots for the morning session.
Technicals showed palm oil is expected to rise to a range of RM2,509-RM2,534 per tonne, as an uptrend has extended, said Reuters market analyst Wang Tao.
Malaysia’s palm oil stocks currently stand at 1.82 million tonnes, more than five per cent lower compared to April, as exports outstripped near-stagnant output.
The government on Monday said it will keep its export duty for crude palm oil in July at 4.5 per cent.
Investor sentiment was dampened ahead of this week’s US Federal Reserve policy meeting, which could see the superpower curbing its stimulus programme and potentially crimping global commodity demand.
In other markets, Brent crude futures were barely changed around US$105 a barrel, holding not far off their strongest level in 10 weeks on mounting tensions in the Middle East.
In vegetable oil markets, US soyoil for July rose 0.2 per cent in early Asian trading. The most-active September soybean oil contract on the Dalian Commodities Exchange gained 1.0 per cent.– Reuters
Source : Business Times