MALAYSIAN palm oil futures rose 1.9 per cent yesterday, led by the rally in crude oil, which posted its biggest percentage gain in four months on Tuesday and also lifted other vegetable oil markets.
Palm oil has performed slightly better than other rival vegetable oils so far this year, falling just 6.5 per cent compared to US soyoil’s 8 per cent drop and declines of up to 8.5 per cent in China’s Dalian soybean oil.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange settled up RM46 to RM2,498 per tonne. Traded volume nearly doubled to 19,781 lots of 25 tonnes each from the usual 10,000 lots.
“The crude oil rally may be restarting again. Hard to say but it’s giving a leg up to some agriculture commodities,” said a trader with a local commodities brokerage.
But another trader said: “There are questions on whether the good (palm oil) exports can cut into the over 2 million tonnes of stocks we have and about the impact of China’s monetary tightening on future demand.”
This year, palm oil netted losses on the back of December’s surprisingly high stocks and after some credit tightening measures from China came into effect.
But declines have been cushioned by signs of limited production in the first quarter of 2010 and some optimism over the global economic outlook, traders said.
Expectations for a large soy crop in South America and speculation that China, a top soybean buyer, was switching some of its orders for US soy to South American suppliers had dragged on soyoil markets.
On the physical market, February South went up to RM2,520 per tonne from RM2,480 per tonne on Tuesday.
Source : Business Times