Palm Oil Gains To 1-Week High On Export Recovery

SINGAPORE: Malaysian palm oil futures rose to the highest in over a week on Thursday, thanks to a recovery in export demand, although gains were capped by prospects of higher global oilseed supplies.

 Prices remained under pressure amid projections for a bumper soy crop in the U.S. Midwest and Argentina, which could yield ample soybean oil supply that would take demand away from competing palm oil.

 But prices were boosted in the afternoon session by the recovery in Malaysia's palm oil shipments, which edged up 4-5 percent in July from a month ago, reversing a trend seen in the first half of the month.

 "The market is a bit lethargic at the moment. There is good news like the positive exports data, but most traders are taking a wait-and-see approach as the market lacks direction," said a trader with a foreign commodities brokerage in Kuala Lumpur.

 At market close, the benchmark October contract on the Bursa Malaysia Derivatives Exchange had gained 1.1 percent to 2,260 ringgit ($697) per tonne, just a tad below its intraday high at 2,262 ringgit, a level unseen since July 23.

 Total traded volume stood at 29,194 lots of 25 tonnes each, lower than the average 35,000 lots.

 Technicals showed palm oil's rebound target at 2,272 ringgit per tonne has been temporarily aborted, as it seems to have lost its bullish momentum after breaking a resistance at 2,221 ringgit, said Reuters analyst Wang Tao. 

Traders are pinning hopes on a weak ringgit to bolster palm oil demand as the ringgit-priced feedstock becomes cheaper for overseas buyers.

 The Malaysian currency recovered slightly on Thursday but stayed close to a three-year low against the dollar.

 In other markets, Brent oil headed towards $109 a barrel on Thursday as upbeat economic data from China and Europe pointed to a stronger demand outlook and unrest in Libya and Iraq disrupted supplies.

 In vegetable oil markets, the U.S. soyoil contract for December rose 0.2 percent in late Asian trade.

 The most-active January soybean oil contract on the Dalian Commodities Exchange closed 0.1 percent lower. - Reuters