Malaysian crude palm oil futures ended nearly 2 percent higher on Tuesday as expectations of strong overseas buying for the Muslim holy month of Ramazan and firm prices of rival soyabean oil buoyed the market.
Comments by leading analyst Dorab Mistry, who said crude palm oil futures are expected to trade between 2,300 and 2,500 ringgit ($669-$727) a tonne in coming weeks, also supported palm oil prices.
The benchmark September contract on the Bursar Malaysia Derivatives Exchange settled up 47 ringgit or 1.9 percent to 2,515 ringgit ($730) a tonne. "There has been some market talk that refiners are quickly buying as there is some demand coming in from the Middle East," a leading trader said. "Ramazan demand could be setting in very soon."
Industry officials say palm oil demand is expected to pick up from July as nations from South Asia to the Middle East lock in supplies for Ramazan, which is due in September. Other traded months rose between 10 and 50 ringgit while the November 2008 contract was unchanged. Overall volume jumped to 12,080 lots of 25 tonnes each at the end of trade. Palm oil is just 9 percent off a historic high of 2,764 ringgit reached last month on robust demand from India and China and dwindling reserves at home.
"The palm oil market is also up on higher soyabean oil," said another trader. "Mystery's comments have been supportive as the market has already moved past the 2,500 ringgit level." The Chicago Board of Trade soyabean futures market rose Monday on follow-through buying from Friday in response to the government's lower-than-expected US soya acreage figure.
The July contract extended gains on Tuesday, rising 0.11 cent to 36.84 cents per lb. during electronic trading. Soyaoil usually lends support to the palm oil market due to common use in products ranging from lipstick to confectioneries and bifocals. September palm oil on Singapore's Joint Asian Derivatives Exchange climbed 1.7 percent at $730.25 a tonne with distant months moving up in thin trade.
In Malaysia's physical market, crude palm oil for July shipment was quoted at 2,620/2,630 ringgit a tonne. Trades were done between 2,600 and 2,620 ringgit a tonne.
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