Malaysian crude palm oil futures closed almost one percent higher on Tuesday at new eight-year highs as strong exports and a decline in reserves boosted the market.
The benchmark third-month June contract on the Bursar Malaysia Derivatives Exchange finished up 21 ringgit, or 0.98 percent, to 2,153 ringgit ($625) a tonne, a level not seen since January 1999. The contract hit a session high of 2,184 ringgit. "Everyone is chasing palm oil, stocks are down and exports are picking up," one dealer said.
Malaysia's end-March palm oil stocks fell 10.61 percent to 1.34 million tonnes as exports jumped almost 30 percent in the month and production failed to keep pace, the official Malaysian Palm Oil Board said on Tuesday.
Other traded months rose between one and 30, except for November and May 2008 contract, which were slightly down. Overall volume stood at 13,286 lots of 25 tonnes each.
Malaysia's exports are picking up after months of slowdown because of strong demand from top buyers China and India. Exports of Malaysian palm oil products for April 1-10 rose 38 percent to 428,985 tonnes from 310,679 shipped between March 1 and 10, cargo surveyor Intake Testing Services said.
Another cargo surveyor, Society General de Surveillance, said exports during the period rose 49.7 percent to 431,121 tonnes from a month ago. The market has risen almost 6 percent this month on a firm global crude oil market and tight palm oil supplies at home.
Dealers said Malaysian refiners in the southern and central regions were facing shortages due to a sharp decline in imports from neighbouring Indonesia. They estimated Malaysia's palm imports from Indonesia in January and February slipped to around 37,000 tonnes this year from about 300,000 in the same months in 2006. "It is a hand-to-mouth situation for refiners, whatever is being produced is being taken for refining," another dealer said.
Malaysian palm oil prices soared 40 percent last year because of biodiesel demand, and the market is forecast to rise around 20 percent this year. In the physical market, crude palm oil for April shipment in the southern region was quoted at 2,195/2,200 ringgit a tonne. Deals were done between 2,170 and 2,205 ringgit.
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