Malaysian palm oil futures rose to their highest in more than a week on Monday, lifted by strong crude and soya oil markets overseas, and on investor anticipation that festival-driven consumption will stoke demand for the tropical oil. Market players are watching for cargo surveyor export data for the first half of April, due on Tuesday, to gauge global demand for palm. Shipments of palm products between April 1-10 rose 3-5 percent compared with the same period a month ago.
Palm's consumption in India, Pakistan and the Middle East typically rises ahead of the holy month of Ramazan which is followed by the Eidul-Fitr celebrations. "The palm market is pulling up on the back of expectations of slightly better exports this month," said a trader with a foreign commodities brokerage. "Prices have been at the low side - this should encourage more buying."
The benchmark June contract on the Bursa Malaysia Derivatives Exchange had edged up 0.2 percent to 2,621 ringgit ($807) per tonne by Monday's close. Intraday prices earlier touched 2,665 ringgit, their highest since April 4. Benchmark palm prices lost nearly two percent last week, falling for four out of five weeks on worries of slackening exports and an unexpected jump in production in the world's No 2 grower which pushed up inventory levels.
Total traded volume stood at 34,738 lots of 25 tonnes, slightly below the average 35,000 lots. Technicals showed Malaysian palm oil is expected to test resistance at 2,651 ringgit per tonne, with a good chance of breaking above this level and rising further to 2,676 ringgit, said Reuters market analyst Wang Tao.
Higher crude oil prices would channel biofuel demand to palm, as it makes the tropical oil a more attractive option as a biodiesel feedstock. Firm soyaoil prices in the US and China also provided support to palm, a rival vegetable oil. The US soyaoil contract for May rose 0.1 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange gained 0.2 percent. "The palm market is strong today because of gains in the soyaoil markets on Friday and today," the Kuala Lumpur-based trader added. "Crude oil is around $104, which means that biofuel demand is coming into play again."
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