Malaysian palm oil near four-month high

Malaysian palm oil futures hit a near four-month high in early trade on Monday, tracking overnight gains in soyaoil on the Chicago Board of Trade and on forecasts of lower-than-expected output increases and end-stocks. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was up 0.8 percent to 2,675 ringgit ($625.00) at the close of trade. It had earlier hit a near four-month high of 2,705 ringgit, its strongest level since April 6.
Traded volumes stood at 32,283 lots of 25 tonnes each at closing trade. "The market is up today largely because of external markets and overseas weather," said a futures trader from Kuala Lumpur referring to gains in soyaoil prices on Friday.
The trader said the market was bullish on news that a US court said the Environmental Protection Agency (EPA) had erred when setting standards for how much renewable fuel must be included in fuel sold in the US and ordered the agency to try again. The EPA had earlier tried to lower the amount of biofuels that needed to be mixed into US fuel.
Dry weather concerns in the soya-growing areas of the US also added strength to soya prices. Palm oil prices are impacted by related edible oils such as soya, as they compete for a share in the global vegetable oils market. The October soyabean oil contract on the Chicago Board of Trade surged 2.2 percent on Friday, but was last down 0.6 percent on Monday.
Another palm oil trader added that Malaysian production and end-stocks for July "are to be lower than previously expected," which also contributed to palm's strength. Rising demand could also support palm oil prices, as this reduces stockpiles in Malaysia, the world's second largest palm oil producer after Indonesia. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance reported gains in July shipments from Malaysia, up 4.1 percent from a month ago.
In other related oils, the September soyabean oil on the Dalian Commodity Exchange was up 0.4 percent, while the September palm olein contract rose 0.9 percent. Palm oil may test a resistance at 2,675 ringgit per tonne, probably after a shallow correction to a support at 2,638 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.