Malaysian crude palm futures closed 1.2 percent higher on Wednesday, supported by strong soyaoil prices and fresh buying. Traders said the market was expected to remain higher due to tight supplies and strong export demand. The benchmark August contract finished up 27 ringgit at 2,323 ringgit ($683) a tonne after hitting a session high of 2,343 ringgit.
"Buying into the market now gives players more ammunition to make profit as there are expectations that prices will still go up on high demand and short supply," said a dealer. "To some extent, soyaoil is also supporting the market." On Tuesday, Malaysian crude palm oil futures fell 1.8 percent as players booked profits after the market reached near nine-year highs.
The palm oil market has gained more than 16 percent this year after surging 40 percent in 2006 on demand from the bodiless and food sectors. Other traded contracts rose between 26 and 42 ringgit. Overall volume rose to 16,109 lots of 25 tonnes each, compared with 12,000 lots on a routine day.
Soyaoil futures on the Chicago Board of Trade rose during Asian hours on Wednesday, with the July contract up 0.15 cent at 34.75 cents a lb. Malaysian palm oil usually follows the US soyaoil market because both commodities are used in products ranging from food and cosmetics to bodiless.
Malaysia's Palm Oil Board said the country's April closing stocks fell 11.65 percent to 1,181,320 tonnes, the lowest in almost three years. The board said palm oil output in April rose 4.11 percent, less than expected, and exports showed a steady growth of 5.9 percent.
Exports of Malaysian palm oil products between May 1 and 15 fell 4.5 percent to 637,090 tonnes from 666,793 shipped between April 1-15, according to cargo surveyor Interlake Testing Services.
Another surveyor, Society General de Surveillance, said exports during the period fell 1.5 percent to 632,736 tonnes from 642,492 shipped between April 1-15. Dealers said the decline in exports was marginal and buying from India and China was expected to pick up.
In the physical market, crude palm oil for May shipment in the southern region was quoted at 2,500/2,510 ringgit a tonne. Deals were done between 2,500 and 2,510 ringgit.
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