Malaysian crude palm oil rose to a fresh 29-month high on Thursday as investors bet heavier monsoon rains next month would cut production. Investors also expected a stocks and production report by the Malaysian Palm Oil Board due on Friday to show a drawdown in inventories and lower yields at a time of resilient export demand.
For the poll, see Palm oil, which has gained 36 percent this year, also drew support from grains markets pricing in tight supplies ahead of an possible extension of a US ethanol subsidy programme and rains pounding Australian wheat crops. Bullish agricultural fundamentals have outweighed the rising dollar trend that usually signals a declining investor appetite for riskier commodities and equities assets.
"The palm oil market took a breather yesterday but more cues from the grains markets indicate that food supplies are tight," a trader with a foreign commodities brokerage said. The benchmark February 2011 crude palm oil on the Bursa Malaysia Derivatives Exchange rose as much as 1.3 percent to 3,640 ringgit ($1,157), a level unseen since July 4, 2008, before giving up some gains to settle at 3,598 ringgit. Traded volumes more than doubled to 22,294 lots of 25 tonnes each from the usual 10,000 lots.
Reuters' technical analysis suggested a bull trend will stay intact for Malaysian palm oil so long as a support at 3,525 ringgit per tonne holds firm. Investors booked some profits in other vegetable oil markets ahead of key US crop report expected to reflect tight supplies and a spike in demand, mostly from China. US soyaoil for December delivery edged up 0.1 percent and the most active September 2011 soyaoil contract on China's Dalian Commodity Exchange fell 0.1 percent.
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