Palm oil creeps up

Malaysian palm oil futures edged up in rangebound trade on Monday, fed by optimism that output in July could miss initial estimates, although sluggish exports damped investor appetite. Palm production in Malaysia, the world's No 2 producer, rose 2.3 percent in June, signalling the start of a higher output cycle in the second half of the year. But a bigger uptick in July could have faltered, as plantation workers get shorter hours during Ramazan to observe a fast that runs from sunrise to sunset.
"A lot of people still believe that production should be up against the previous month. But this is the fasting month. I think it won't be up much, may be less than 5 percent," said a trader with a foreign commodities brokerage. Palm oil exports from July 1 to 20 fell 14 percent from a month ago, cargo surveyor Intertek Testing Services showed, as shipments to India and Europe slackened. Another surveyor, Societe Generale de Surveillance, reported a 13.4 percent decline.
"The market is still rangebound, between 2,200 and 2,300 ringgit. There is a strong setback from the export figures. Towards the end of the month, exports should roughly be down around 10 to 12 percent," the Kuala Lumpur-based trader added. The benchmark October contract on the Bursa Malaysia Derivatives Exchange gained 0.7 percent to close at 2,272 ringgit ($715) per tonne. Prices traded in a tight range between 2,245 and 2,281 ringgit. Total traded volume stood at 22,504 lots of 25 tonnes each, lower than the average 35,000 lots.
Global oilseeds prices are likely to edge lower on an ample supply outlook, with Malaysian refined palmolein prices to average a four-year low of $820 over the next 12 months, said leading vegetable oil analyst Thomas Mielke. That represents a decline of 3 percent from the $845 average in the year ending June 2013, Reuters calculations showed. World palm oil production is likely to rise to a record 56.2 million tonnes in 2013 from 53.7 million in 2012, Mielke said in a paper prepared for an online palm oil seminar this week.
In other markets, oil rose above $108 a barrel on Monday as investors shift their focus to US oil that extended its gains against Brent after flipping to a premium for the first time since 2010 in the previous session. In vegetable oil markets, the US soyoil contract for December rose 0.5 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange also gained 0.2 percent.