Malaysian palm oil climbs

Malaysian palm oil futures hit a one-week high on Monday, on possible progress on eurozone debt problems combined with expectations of lower output for the edible oil. Investors await Europe's unveiling of a plan on Wednesday to stave off a Greek default, write down debt and re-capitalise banks as leaders near agreement on how to leverage their rescue fund to try stop the crisis from spreading.
Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange ended up 0.2 percent at 2,890 ringgit ($917) a tonne, versus an earlier high at 2,919. Traded volumes for the January palm contract stood at 12,213 lots of 25 tonnes each compared with 11,887 lots on Friday.
"There is a bit of strength coming from higher crude oil and the Dalian," said a palm oil dealer in Kuala Lumpur, referring to palm oil futures traded on China's Dalian exchange. "The feeling in the palm market now is not too bearish because we're expecting to see production coming off."
A slowdown in Europe, the second-largest palm consuming region after Asia, could weaken demand, although palm oil could maintain its market share in the region as it is the cheapest edible oil. US soyoil for December delivery climbed more than 1 percent in Asian trade, while China's most active May 2012 soybean oil contract was also up.
"From these levels we're still relatively bullish compared to the market," said Abah Ofon, a Singapore-based analyst at Standard Chartered Bank. "Going forward, the market is going to be supported by the fact that yields are probably going to inch lower, and by the fact that palm oil is still traded at a healthy discount to soyoil."
Brent crude oil rose above $110 a barrel after stronger Chinese manufacturing data suggested the world economy would avoid a double-dip recession, supporting fuel consumption. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance are due to issue October 1-25 Malaysian palm oil export data on Tuesday.
"Export market talk is for the number to be about 1.25 million tonnes," said a second Kuala Lumpur-based trader. "But the pace will have slowed a bit compared to earlier months." Palm oil product exports from Malaysia, the world's number two producer, were 1,031,953 tonnes for October 1-20. Reuters technical analyst Wang Tao said palm oil may briefly touch the October 21 high of 2,903 ringgit per tonne and then fall to 2,870 ringgit. Indonesia, the world's biggest palm oil producer, said late on Friday it has lowered the crude palm oil (CPO) export tax for November to 15 percent, from 16.5 percent in the previous month.