KUALA LUMPUR, Sept 25 (Reuters) – Malaysian palm oil futures stretched gains into a third day on Thursday to touch their highest in more than six weeks, buoyed by robust demand and expectations that output would drop this month.
Market players said that firm export demand, coupled with weaker palm yields in September, would prevent another big rise in inventories in the top palm-growing countries.
In August, Malaysia’s stocks surged 22 percent from July to 2.05 million tonnes. Exports of Malaysian palm oil products rose 29.6 percent to 1,278,703 tonnes between Sept. 1-25 compared with the same period a month before, cargo surveyor Intertek Testing Services reported. Another surveyor Societe Generale de Surveillance said exports for the same period rose 34.6 percent. PALM/ITS Shipments to India, China and Europe – key buyers of palm oil – were stronger than in August, while total exports of crude palm oil for the period were nearly double from a month ago. “Why not?” said a trader with a foreign commodities brokerage in Kuala Lumpur, asked about a potential jump in export demand.
“You have no tax on crude palm oil, cheap palm prices … The timing is good. People are rushing to buy. India will have Deepavali and in a few months China will celebrate Lunar New Year.”
The benchmark December contract FCPOc3 on the Bursa Malaysia Derivatives Exchange climbed to 2,207 ringgit in late Thursday trade, the highest since Aug. 11, before settling at 2,198 ringgit ($676) per tonne by the day’s close, a 2 percent gain.
Total traded volume stood at 47,528 lots of 25 tonnes each, above the usual 35,000 lots.
Some investors, however, say palm prices could be overbought and expect a correction to kick in.”The supportive tone will prevail till tomorrow or the weekend,” said a second palm trader in Kuala Lumpur. “However, a quick fall or retracement is very likely due to the overbought scenario in the intraday chart.” The Malaysian Palm Oil Association forecast palm oil production fell about 12 percent between Sept. 1-20, led by a drop in output in peninsular Malaysia.
Investors will also be watching for trading hints from Globoil India, a three-day conference from Sept. 26-28, where leading vegetable oil analysts and industry players will deliver their outlook on vegetable oil prices and global demand. Industry players said competing efforts by top palm oil producers Indonesia and Malaysia to raise exports of the tropical oil, and the impact of falling crude oil prices on biodiesel demand will be the primary focus of the conference.
In competing vegetable oil markets, the U.S. soyoil contract for December BOZ4rose 1.1 percent in late Asian trade, while the most active January soybean oil contract DBYcv1 on the Dalian Commodities Exchange gained 1.7 percent. In other markets, Brent crude oil slipped further below $97 a barrel on Thursday as plentiful supply and a strong U.S. dollar outweighed concerns about potential loss of supply as a result of conflict in the Middle East. O/R
Palm, soy and crude oil prices at 1016 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT4 2205 +27.00 2180 2211 975
MY PALM OIL NOV4 2203 +44.00 2170 2210 5870
MY PALM OIL DEC4 2198 +44.00 2164 2207 23605
CHINA PALM OLEIN JAN5 5250 +106.00 5164 5268 891632
CHINA SOYOIL JAN5 5970 +98.00 5930 5984 512468
CBOT SOY OIL DEC4 33.09 +5.90 32.76 33.18 7511
INDIA PALM OIL SEP4 471.40 +5.90 466.70 472.40 427
INDIA SOYOIL OCT4 618.20 +6.00 614.50 620.50 63595
NYMEX CRUDE NOV4 92.72 -0.08 92.51 92.99 15470
Palm oil prices in Malaysian ringgit per tonne ($1 = 3.252 Malaysian ringgit)
CBOT soy oil in U.S. cents per pound ($1 = 6.1363 Chinese yuan)
Dalian soy oil and RBD palm olein in Chinese yuan per tonne ($1 = 61.16 Indian rupees)
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
Source : REUTERS