Malaysian palm oil jumps

Malaysian crude palm oil futures jumped 2.2 percent on Thursday, after three consecutive days of declines, as higher crude oil prices and a weaker US dollar lifted the market. The benchmark March contract on the Bursa Malaysia Derivatives Exchange settled up 54 ringgit to 2,554 ringgit ($745) per tonne after going as high as 2,573 ringgit.
Traded volumes fell to 8,233 lots of 25 tonnes each from the usual 10,000 lots. Trading is winding down ahead of Christmas. "Crude oil is bound to touch $80, sooner or later, and the palm oil traders left in the market are speculating on this," said a dealer with a foreign commodities brokerage. "We are still quite strong on the demand-supply scenario."
Expectations of a stock drawdown due to the end of the high production season supported the market. Traders expect stocks to fall about 13 percent to 1.68 million tonnes in December compared with the previous month. Exports appear to be slowing as the year draws to a close. Cargo surveyor Intertek Testing Services saw an 11.4 percent drop in Malaysian palm oil exports to about 1 million tonnes in December 1-25 from the same period a month ago.
The Malaysian ringgit firmed against the dollar in light trade, broadly tracking the euro and Singapore dollar and snapping losses made this week. The strengthening greenback had weighed on palm oil futures for much of the week as most Malaysian palm oil exports are in the form of products that are priced in the currency.
But the US dollar rally has stalled, lifting crude oil above $77 a barrel on Thursday and supporting other vegetable oil markets. US soyoil for January delivery climbed 1.1 percent. The most-active September 2010 soyoil contract on China's Dalian Commodity Exchange gained 1.2 percent and traders expect the market to be quiet till the end of the year.
The domestic futures market will be very stable within these two weeks, since we have two consecutive holidays - Christmas and New Year," one trader in Shanghai said. "There might be few trades going on, but this will not affect the demand and supply."
INDONESIA PALM TRADES In Indonesia, the state palm oil marketing centre based in Jakarta did not hold an auction due to the approach of the holidays. Trades will resume on Monday. Producers in Medan, home to Indonesia's main palm oil export port of Belawan, did not hold an auction either. Traders say the market will carry out auctions from January 4 onwards.