Malaysian palm oil futures rose to a more-than-one-month high on Wednesday, reversing intraday losses caused by a bout of technical correction, as hopes of stronger exports provided support. Shipments of Malaysian palm products jumped 32-34 percent in the first half of September compared to a month ago, cargo surveyor data showed, with demand for crude palm oil more than doubling after the No 2 grower scrapped export duties for September and October.
“Today it may correct lower a bit before pulling up to 2,180 ringgit and 2,250 ringgit in the coming days or weeks,” said a trader with a foreign commodities brokerage in Malaysia. The benchmark December contract on the Bursa Malaysia Derivatives Exchange rose to 2,150 ringgit in late trade, the highest level since August 14, before ending up 1.0 percent at 2,140 ringgit ($665) per tonne.
Total traded volume stood at 71,020 lots of 25 tonnes, double the usual 35,000 lots. Technicals showed that palm oil may end its current rebound around a resistance at 2,142 ringgit per tonne before starting a correction towards 2,055 ringgit, said Reuters market analyst Wang Tao. Despite the stronger exports, gains in palm were still limited, as prospects of surging supplies of rival oilseeds threaten to overwhelm global demand and water down interest for the tropical oil.
Leading vegetable oil analyst Dorab Mistry on Monday forecast palm prices to drop to 1,900 ringgit over the next few weeks, and warned that prices need to stay low to remain competitive over substitute edible oils such as soy and sunflower. “Investors are digesting the external bearishness with domestic bullishness,” said a second trader with a Malaysia-based commodities brokerage. Production of crude palm oil may lose steam in September, some traders said, after jumping 22 percent in August to 2.03 million tonnes.
A group of millers in southern Malaysia estimate the output between September 1-15 dropped about 11 percent from a month ago. In rival vegetable oil markets, the US soyoil contract for December rose 1.0 percent in late Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange shed 0.6 percent.
Copyright Reuters, 2014
Source : BusinessRecorder