Malaysian palm oil futures rose to their highest in a month on Friday and posted a 3.3 per cent weekly gain as hopes of export demand whittling down stocks offset uncertainty in Europe.
Data this week has lifted expectations of market participants that exports of palm oil will climb and help ease the 2.44-million-tonne stock buildup in Malaysia, the world’s No.2 producer of the edible oil.
“Exports in March should be much better than February’s. With exports up and production going down, end-stocks in March could go below 2.35 million tonnes,” said a trader with a foreign commodities brokerage in Kuala Lumpur.
The market was also supported by leading analyst Dorab Mistry’s projection that palm oil futures could trade between RM2,400 and RM2,700 per tonne by the end of May, an upward revision from his previous forecast.
The benchmark June contract on the Bursa Malaysia Derivatives Exchange gained 1.6 per cent to close at RM2,494 per tonne, off an earlier high of RM2,503, the highest level since February 22.
Total traded volume stood at 43,725 lots of 25 tonnes each, higher than the usual 25,000 lots.
Also playing on general market sentiment were concerns about a possible debt default by Cyprus, which could hit the euro zone’s fragile recovery and crimp edible oil demand.
But for the week, palm oil futures still posted a 3.3 per cent gain as a rise in exports offset caution over macroeconomic uncertainty.
Traders will be looking out for the next export data due on Monday as they say demand needs to pick up faster to bring stockpiles to comfortable levels. Record stocks last year had dragged prices down more than 20 per cent, palm’s worst performance since the 2008 global financial crisis.
In other markets, Brent crude held above US$107 a barrel, but was still on track for a second straight week of losses, as Cyprus scrambled to raise money to avert a financial meltdown that could disrupt the euro zone’s recovery and diminish its oil demand.
In other vegetable oil markets, US soyoil for May delivery was almost flat in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange inched down 1 per cent.– Reuters
Source : Business Times