Malaysian crude palm oil futures hit a two-week high on Monday as caution receded after European authorities agreed to bail out Ireland and concerns grew over the weather in oilseed growing regions. The price of the vegetable oil resumed a rally ahead of a price outlook conference starting in Indonesia on Wednesday from which traders are expecting bullish forecasts.
"There appears to be a lot of bullish sentiment and palm oil got its latest cue from crude oil, which also jumped on the Irish news," said a trader with a domestic commodities brokerage. Finance ministers from the 16-nation eurozone, anxious to prevent market contagion engulfing Portugal and Spain, unanimously endorsed an emergency loan package of 85 billion euros ($115 billion) to help Dublin cover bad bank debts and bridge a huge budget deficit.
Benchmark February 2011 palm oil on the Bursa Malaysia Derivatives Exchange rose as much as 112 ringgit, or 3.5 percent, to 3,390 Malaysian ringgit ($1,075) per tonne in the afternoon session before settling at 3,381 ringgit. Traded volumes almost doubled from the usual to 18,360 lots of 25 tonnes each. Prices were also boosted by heavy monsoon rains that have disrupted some harvesting rounds in oil palm growing regions in Malaysia and increased moisture content in oil palm fruits, while drier weather has delayed soya plantings in South America and hurt the US wheat crop.
"The news from Ireland suggests that there are efforts to keep economic recovery on track but fundamentally, palm oil is strong as we are expecting strong export figures on Tuesday," said another trader in Malaysia. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will report Malaysia's November palm oil exports on Tuesday.
Exports have so far risen by nearly a quarter for the first 25 days in November. US soyaoil for December delivery rose 1 percent in late Asian trade. The most-active September soyaoil contract on the Dalian Commodities Exchange closed up 1.4 percent. Oil rose to a two-week high above $85 on Monday after the European Union approved a rescue for Ireland and outlined a permanent system to resolve the eurozone's debt crisis.
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