Malaysian palm oil futures hit fresh two-year highs on Thursday as traders took positions on cues from upbeat global commodity markets and fears of heavy rains affecting output. Global commodities markets surged after inflation concerns stoked by data from China drew investors to physical assets as a way to protect wealth.
"External markets are giving Malaysian palm oil the strength to move upward and I believe the price could surge above 3,600 ringgit," said a trader in Kuala Lumpur. Malaysia's benchmark crude palm oil futures index rose 5 ringgit to 3,441 ringgit ($1,115) per tonne after touching a 27-month high of 3,452 ringgit earlier in the day.
Overall traded volume more than tripled to 33,441 lots of 25 tonnes each. Rains, which led to flooding in northern mainland Malaysia, stoked concerns that there could be heavier than usual showers in key palm growing areas in the south as well, said another trader.
"Production in major plantation areas, including Sabah in Borneo Island and mainland's Johor state, will be hit by a second wave of monsoon later in this month and December," he added. Heavy rains in main harvesting areas usually curb yields and disrupt the transportation of vegetable oil. A Reuters technical analysis showed an immediate target for Malaysian palm oil is 3,552 ringgit per tonne.
Malaysia's OSK financial group raised its CPO price estimates in 2010 and 2011 to 2,700 ringgit per tonne, compared with 2,500 ringgit made earlier, based on strong stocks level in first quarter next year that may not hold past mid-2011 due to a bumper crop. Crude reached a 25-month high in Asian hours as strong industrial output sent demand in China to a record and a surplus subsided in top consumer the United States.
US soyaoil for December inched up during Asian trade hours, driven by firmer soyabean that underpinned demand from China, the world's biggest importer. The most active China September 2011 soyaoil fluctuated throughout the day and closed down 0.6 percent on Thursday. It had risen earlier in the day after official economic data showed inflation accelerated to 25-month highs in October.
Comments
Comments are closed.