Malaysian palm futures rose 1.1 percent on Tuesday as fears lingered over prospects for strong exports to mop up low stock levels in the world's second largest producer of the vegetable oil. The benchmark July contract settled down 28 ringgit at 2,688 ringgit ($765.8) per tonne. Overall volume was light, with 3,495 lots of 25 tonnes each changing hands.
"Output is a worry, it might be due to the current hot weather," said a trader with a local commodities brokerage. "Dalian soyoil is also giving some support here." The most-active September soybean oil contract on China's Dalian Commodity Exchange rose 0.9 percent.
Citigroup analyst Penny Yaw said palm oil's discount to soyoil was fast narrowing to $95 per tonne now from $230 a tonne in 2008. "If the CPO-soya gap continues to narrow,there could be less switching by price-conscious buyers from soya oil to palm oil," she said. Palm oil output in Malaysia will struggle to rise in the next few months and may not even hit strong double digit peaks this year as the current hot and dry weather hurts yields, plantation officials said on Tuesday.
Expectations of sliding stocks, which have hit a 22-month low in April, coupled with low soybean yields in Argentina, raised fears of tight global vegetable oil supplies. In the Malaysian physical market, palm oil for May delivery was sold at between 2,850-2,860 ringgit per tonne in both the southern and central regions.
Comments
Comments are closed.