Malaysian palm oil rises

Malaysian palm oil futures extended earlier gains to close almost 1 percent higher on Tuesday, as firmer comparative oils and improving short-term demand expectations supported prices. The benchmark September crude palm oil contract on the Bursa Malaysia Derivatives Exchange ended 0.9 percent higher at 3,221 Malaysian ringgit ($1,058) a tonne, after hitting an earlier high at 3,230 ringgit.
Traders said that in the short-term, the approaching Muslim festival of Ramadan in August is likely to result in an uptick in demand from July onwards. "We will see increased buying from some countries ahead of Ramazan," said on analyst. "That is quite positive. "It's the season where demand is expected to pick up quite significantly, keeping prices up as well."
On Monday, data showed that exports of Malaysian palm oil products for June 1-20 rose 22 percent to 969,804 tonnes from 794,322 tonnes during May 1-20. Traded volume for the September contract was thin at 8,778 lots of 25 tonnes each, versus a total at 13,236 lots on Monday.
Longer-term as we head into the second half of 2011 and a higher production cycle in Southeast Asian producing countries, analysts doubt that demand will keep pace with supplies. On Friday, benchmark prices touched their lowest level since May 6 at 3,163 ringgit, due in part to growing stock levels.
Stocks in Malaysia are expected to rise above a 16-month high of 1.92 million tonnes hit last month. While this could draw in more demand, the country is going through a high production period. "The second half average price should be lower than the first half average," the analyst said. "Second half I would say an average at about 3,233 ringgit."
In related markets, oil rose from a dive to a four-month low in the previous session as the euro gained against the dollar ahead of a confidence vote in Greece aimed at avoiding a messy default of its sovereign debt. US soyoil for July delivery climbed in Asian trade, while the most active January 2012 soybean oil contract on the Dalian Commodity Exchange also rose. "It has been pretty slow on the cash market," said another palm oil trader. "There was movement on crude oil and the soy market.