Palm oil climbs

Malaysian palm oil futures rose more than 3 percent on Wednesday, recouping losses sustained in the previous two sessions, on concerns over dry weather hurting production in Southeast Asia. Dry weather over the past month in Indonesia and Malaysia is adding to global concerns over edible oil supplies with lack of rains taking a toll on soyabean production in Brazil.
Market participants said the unexpected dryness could threaten yields of fresh fruit bunches, curbing palm oil supply and tightening end-stocks to about 1.83 million tonnes from the current 1.93 million tonnes. "The big factor in the palm market is supply concerns, caused by the unforeseen dry weather which could persist until April," said a trader with a foreign commodities brokerage.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange rose more than 3 percent in late trade to 2,818 ringgit per tonne, hitting their highest since September 20, 2012. Prices later settled to 2,803 ringgit ($857) by Wednesday's close. Total traded volume stood at 57,115 lots of 25 tonnes, much higher than the average 35,000 lots.
Brazil's No. 2 soya growing state Parana lost some 2 million tonnes of soyabeans to drought and hot weather in January and February, the state government said on Tuesday. Malaysian palm oil third month contract is expected to revisit its February 24 high of 2,777 ringgit per tonne, as it may have completed a correction from this level. But weaker-than-expected export data put a lid on gains, stoking worries over recovery in vegetable oil demand.
Exports of Malaysian palm oil products from February 1-25 rose 1.6 percent to 1,048,311 tonnes compared to the same period in January, cargo surveyor Intertek Testing Services said, slowing down from the rapid export growth seen earlier in the month. Another cargo surveyor, Societe Generale de Surveillance, reported that exports in the same period rose 3.4 percent, as bigger demand from India was offset by smaller shipments to China and Europe. US soyaoil contract for May rose 1.2 percent in late Asian trade, while the most active May soyabean oil contract on the Dalian Commodities Exchange eased 0.1 percent.