Malaysian palm oil eases

Malaysian palm oil futures eased on Tuesday as some traders booked profits after a cargo surveyor confirmed a strong export trend, with the market scoring its best monthly performance this year. Palm oil has fallen 10.4 percent so far in 2011, dropping for three successive months to April, but bounced back in May due to a recovery in exports and strength in external markets.
"Exports will set market direction. Stocks will be growing but its impact on prices will be moderate because strong demand due to the weaker ringgit and restocking will keep prices higher," said a trader with a foreign commodities brokerage. The benchmark August crude palm oil contract on the Bursa Malaysia Derivatives Exchange settled 0.4 percent lower to 3,393 ringgit ($1,124), after going as high as 3,437 ringgit. The previous day, the contract hit a more than two-month high.
Overall traded volume stood at 24,703 lots of 25 tonnes each. Technicals were mildly negative. Palm oil would retrace into a range of 3,341 to 3,370 ringgit per tonne, according to Reuters technical analyst Wang Tao. Exports of Malaysian palm oil products for May rose 8 percent to 1,354,516 tonnes from 1,255,392 tonnes shipped during April, cargo surveyor Intertek Testing Services said on Tuesday. Another cargo surveyor, Societe Generale de Surveillance, reported a 2.5 percent rise during the same period.
Higher demand comes as the Malaysian ringgit weakens, making crude palm oil priced in that currency cheaper to process. Also, China and India are restocking after weeks of sluggish demand. That could cut into palm oil stocks, which are set to rise to around 1.7 to 1.8 million tonnes this month.
Malaysian palm oil yields are recovering after two years of erratic weather reduced productivity. In April, total output stood at 1.53 million tonnes. Oil rose over $1 on Tuesday with Brent crude above $116 a barrel as the dollar weakened on improved prospects for a bailout for heavily indebted Greece, but oil remained on track for a drop in May. Higher crude oil prices supported some vegetable oil markets. US soyoil for July delivery edged higher during Asian hours after Monday's public holiday, although the most-active January 2012 soyoil contract on Dalian slipped 0.2 percent.