Malaysian palm oil futures edged up 0.4 percent on Thursday as traders bet on demand rising in the face of tighter supplies of competing soyaoil due to unfavourable weather in Argentina. Wet weather in No 3 soybean supplier Argentina has delayed plantings, threatening yields and prompting buyers to increasingly turn to Malaysia, where stocks are likely to have risen to a record 2.58 million tonnes in November.
Stronger demand for palm oil could support benchmark Malaysian futures that have fallen for three straight quarters this year on rising stocks and concerns that the euro zone debt crisis could arrest global economic growth. "High stocks hang over the palm oil market but there may be a bit of hope from the probable decline in South American soy crops," a trader with a foreign commodities brokerage said.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange settled up 10 ringgit at 2,294 ringgit ($750) per tonne. Total traded volumes rose to 45,693 lots of 25 tonnes each, compared to the usual 25,000 lots. Malaysian crude palm oil shipments are expected to rise in the next few weeks, as planters scramble to exhaust an annual tax-free export quota totalling 3.5 million tonnes that is set to expire at the end of December.
China, which has been snapping up US soybean cargoes, is looking to import more palm oil before Beijing imposes stricter quality controls on the refined grades on January 1. In palm oil's competing markets, US soyaoil for December delivery edged up 0.7 percent. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange inched up 0.5 percent.
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