Malaysian palm oil futures touched a five-month peak before turning negative on Thursday, as investors booked profits after prices were boosted by robust demand and investor expectations of lower production in key Asian planters. Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange closed 0.9 percent lower at 3,212 Malaysian ringgit ($1,019) per tonne. Prices earlier touched a peak at 3,268 ringgit, a level not seen since June 15.
Traded volumes for the January palm contract were at a near two-month high at 22,387 lots of 25 tonnes each, compared with 19,326 lots on Wednesday. "A kind of choppy trading day after a recent good run up," said a Kuala Lumpur based trader. "You tend to have some kind of profit taking, consolidation or a even little breather before it moves higher."
Benchmark palm prices have surged about 17 percent since lows below 2,800 ringgit hit in early October, and many traders are bullish on the fourth quarter outlook. Sentiment is improving due to lower production expectations from the fourth quarter, as dominant producers in Indonesia and Malaysia enter the rainy season and the La Nina weather pattern is seen returning. A weak-to-moderate La Nina weather pattern will trigger severe monsoon rains in Malaysia's key oil palm growing regions, the weather office said on Thursday, potentially disrupting the harvest and boosting prices.
Palm oil demand is seen rising in top buyers China and India. Exports of Malaysian palm oil products for November 1-15 rose, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance said earlier this week. "Relatively firm in Q4," said a Jakarta-based palm analyst. "Especially if concerns over Europe debt start to subside." US soyoil for December delivery eased in Asian trade, while China's most active May 2012 soybean oil contract rose.
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