Malaysian palm oil rose for a third day on Friday and recovered most of this week's losses on stronger food commodity prices and as a US government forecast of lower soy output pointed to tighter edible oil supply in coming months.
The US Agriculture Department lowering its soy output estimate for soybeans below the lowest trade guess comes as some planters in Malaysia say palm oil output in the second half of this year may not be as high as expected.
Palm oil rose above the 3,000 ringgit level, four days after it fell below the key support level for the first time since October last year on concerns that the unfolding US and eurozone debt crisis will stall global economic growth and cloud the commodity demand outlook.
"The macro-economic concerns are still there but there is pronounced export growth for palm oil. The renminbi has been strong and will encourage firms to replenish food stocks including palm oil," said a trader with a foreign commodities brokerage in Kuala Lumpur. "The USDA report has helped the palm oil market up, it has given the support to grains and especially palm oil to go up back to 3,000 ringgit," said a trader with foreign brokerage in Kuala Lumpur.
The benchmark October crude palm oil contract on Bursa Malaysia Derivatives settled up 0.7 percent at 3,015 ringgit ($1,005.670) per tonne in seesaw trade. Overall traded volumes were slightly lower at 22,409 lots of 25 tonnes each compared to the usual 25,000 lots.
Chicago corn futures gained more ground on Friday, rising half a percent to trade near a one-week top, while soybeans rose for a third straight day as a government forecast of lower production continued to buoy the markets. Vegetable oil markets derived support from gains although US crude falling during late Asian hours may weigh. US soyoil for September delivery rose 0.1 percent. The most active May 2012 soyoil contract on China's Dalian Commodity Exchange gained 0.5 percent.
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