KUALA LUMPUR: Malaysian benchmark palm oil futures rose on Monday, supported by improved demand and forecasts that stockpiles will drop on falling production ahead of a data release from the Malaysian Palm Oil Board (MPOB).
A Reuters poll forecasts Malaysian stockpiles in April will decline as production slumps versus a year ago. Malaysian end-stocks may drop 3.5 percent to a 14-month low of 1.82 million tonnes in April, in the absence of a sharp seasonal jump in output, the poll showed. Output is forecast to rise 8 percent to 1.32 million tonnes from March, but decline 22 percent year-on-year.
Official data is scheduled for release on Tuesday.
The palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was 1.3 percent higher at 2,662 ringgit ($664) per tonne at the close of trade.
Traded volumes were 39,693 lots of 25 tonnes each in the evening, lower than the 2015 daily average of 44,600.
"Buyers are there due to Ramadan, I think May will see some fairly good demand," said a trader based in Kuala Lumpur.
"While production will rise, end-stocks will be reduced from current levels. Dry weather is not a factor, demand is the bigger concern now."
The Muslim holy celebration of Ramadan, which starts in early June this year, is a month-long event of fasting and feasting that spurs higher palm oil demand for cooking.
Traders are relying on the festive season to drive higher palm oil demand. Shipments of palm oil products fell in April as Malaysia implemented a 5 percent export tax on crude palm oil, and as China, the world's second-largest palm oil buyer, favoured soy imports over palm.
In competing vegetable oils, the September soybean oil contract on the Dalian Commodity Exchange rose 1.6 percent, while the Chicago Board of Trade soyoil contract for July gained 0.7 percent.
The offer price for crude palm kernel oil stood at 4910.78 ringgit per tonne
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