Dalian soyaoil hit a 26-month high on Thursday and Malaysian palm oil rose above 3,000 ringgit as traders bet strong vegetable oil demand will continue to drive soybean crushing in China. A flurry of Chinese economic data issued earlier in the day showed the world's second-largest economy was strong but far from overheating, signalling agriculture markets that imports will stay strong.
-- Malaysian palm oil above 3,000 ringgit The most active May 2011 soyaoil contract on the Dalian Commodity Exchange jumped 2.8 percent to settle at 9,192 yuan ($1,382) after going as high as 9,260 yuan ($1,392) a tonne - the highest for the fifth month since August 26 2008.
"There are lots of excuses to be a bull in the vegetable oil market," said a regional vegetable oil trader in Malaysia. "Apart from China, the weaker dollar is making soybeans more attractive and investors are getting back into commodities in a big way again." The rally began the previous day when China snapped up US soybeans for the sixth straight day, bringing total purchases to 1.117 million tonnes, according to the US Agriculture Department.
China is the world's largest soyabean buyer, taking up more than half of the world's supply. China National Grain and Oils Information centre said on Thursday that the country will import 54 million tonnes of the oilseed in 2010/2011. China's soyabean demand also supported third-month palm oil on Bursa Malaysia, which touched an intraday high of 3,021 ringgit ($968.3) a tonne - a level unseen since July 28, 2008.
Malaysia's palm oil eased to settle at 2,990 ringgit ($958.3) per tonne. Traded volume was heavy with 14,910 lots of 25 tonnes each compared to the usual 10,000 lots. Some analysts said palm oil breaching the 3,000 ringgit level may not be sustainable even though Reuters technical analysis showed palm oil has resumed its uptrend, as the previous wave "5" peak at 2,970 ringgit per tonne has been surpassed. Others were more bullish. Nomura upgraded its palm oil price assumptions by 5-20 percent to 2,265 ringgit a tonne for 2010 and 3,000 ringgit for 2011-2012 on lower than expected production and strong demand from China and India.
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