Palm hits 2-month high tracking strong soyoil, steady stockpiles

KUALA LUMPUR: Malaysian palm oil futures hit a two-month high on Thursday, supported by gains in rival oilseed soy on the Chicago Board of Trade and as stock levels remained steady.

End-stocks in the world's second-largest producer generally rises in the second half of the year, in line with production's seasonal gains.

Production levels in June had declined as workers went on leave during Ramadan and Eid-al-Fitr. July output is expected to rise on-month, but gains so far have not been as strong as expected, lending support to market prices, said traders.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange rose 0.9 percent to 2,653 ringgit ($620.88) at the midday break. Earlier in the session, it rose to 2,656 ringgit, its strongest levels since May 23.

Traded volumes stood at 21,070 lots of 25 tonnes each at noon.

"Market gains were partly because production is not as strong as expected. Stocks are comfortable, they are not rising as exports are still good," said a Kuala Lumpur-based trader.

"Soyoil on the Chicago Board of Trade was also higher yesterday," he added.

Palm tracks the movements in related edible oils, as they compete for a share in the global vegetable oils market.

The October soybean oil contract on the Chicago Board of Trade rose as much as 0.4 percent, after seeing stronger overnight gains of 0.7 percent in its previous session.

In other related edible oils, the September soybean oil on the Dalian Commodity Exchange was up 0.3 percent, while the September palm olein contract rose 1 percent.

The palm oil October contract is expected to rise more into a range of 2,675-2,703 ringgit per tonne, according to Reuters market analyst for commodities and energy technicals Wang Tao.