KUALA LUMPUR: Malaysian palm oil futures rose for a fourth session on Monday to a week's high as better-than-expected export data signalled firm appetite for the tropical oil, with prices underpinned by gains in crude oil and Asian equity markets.
Palm oil investors are also keeping an eye on monsoon rains and flooding in
parts of Malaysia, the world's second-largest grower, which may hurt December
supply.
"The market is being supported by the bullish export figure and impending
floods," said a trader with a foreign commodities brokerage in Kuala Lumpur,
adding that the recovery in crude has also improved investor sentiment.
Oil rose above $62 a barrel on Monday, mirroring gains in equities, as
investors became confident there would be no further substantial price loss in
the run-up to the new year.
The benchmark March contract on the Bursa Malaysia Derivatives
Exchange had edged up 0.8 percent to 2,170 ringgit ($622) per tonne by Monday's
close, its highest since Dec. 15.
Prices traded in a tight range of 2,152-2,174 ringgit, with total traded
volume at 32,464 lots of 25 tonnes, slightly below the usual 35,000 lots.
Volatility seen earlier in the month is anticipated to ebb away as investors
wind down positions before the year-end.
Cargo surveyor Intertek Testing Services reported that exports of Malaysian
palm products for Dec. 1-20 rose 8.8 percent to 911,595 tonnes, compared with
the same period a month earlier, as demand from Europe, China and India picked
up.
The faster pace compared to earlier December could help bring down
inventories of palm oil in Malaysia, which at end-November swelled to a 21-month
high of 2.28 million tonnes.
A decision by the Malaysian government to keep exports of crude palm oil
duty-free until end-February may also boost demand to top consumers.
Meanwhile, Malaysia's meteorological department on Monday raised its "orange
stage" warning to a "red stage" for some parts of major palm-growing states of
Pahang and Johor, which it forecast to receive heavy rains this week.
Monsoon rains on top of palm's seasonally lower production cycle would eat
into stockpiles and lend support to benchmark prices heading into 2015, analysts
said.
"Barring crude oil prices plunging further, we expect crude palm oil prices
to firm in the next three months as fresh fruit bunch yields enter into a
seasonal downtrend," Affin Hwang Investment Bank said in a note on Monday.
In competing vegetable oil markets, the most active May soybean oil contract
on the Dalian Commodity Exchange rose 0.8 percent in late Asian trade,
while the U.S. soyoil contract for March gained 0.2 percent.
Palm, soy and crude oil prices at 1014 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN5 2172 +12.00 2160 2173 367
MY PALM OIL FEB5 2169 +16.00 2155 2172 2923
MY PALM OIL MAR5 2170 +17.00 2152 2174 15858
CHINA PALM OLEIN MAY5 4950 +20.00 4912 4958 581946
CHINA SOYOIL MAY5 5634 +44.00 5600 5662 259694
CBOT SOY OIL MAR5 32.21 +1.40 32.07 32.32 7918
INDIA PALM OIL DEC4 419.00 +1.40 417.10 420.50 383
INDIA SOYOIL JAN5 602.60 +6.60 598.00 603.40 28300
NYMEX CRUDE FEB5 57.43 +0.30 56.72 58.53 45444
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 3.486 Malaysian ringgit)
($1 = 6.2216 Chinese yuan)
($1 = 63.25 Indian rupee)- Reuters
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