Malaysian palm oil climbed 0.7 percent on Wednesday to its highest in almost three weeks with prices rising for four out of six sessions on strong demand and a rally in soyabeans. Chicago soyabeans are trading near a 21-month high after the US government forecast lower world supplies as adverse weather cuts South American yields and demand from top importer China continues to rise.
The palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 0.7 percent at 2,680 ringgit ($665) per tonne at the evening close. It earlier reached an intraday high of 2,717 ringgit, its strongest since April 22. Traded volumes were 63,496 lots of 25 tonnes each at the end of the evening session.
"Palm oil exports are very good and we expect further reductions in Malaysian stocks," one Kuala Lumpur-based trader said. "There are weather issues in Argentina which are reducing supplies of soyabeans." Malaysian data on Tuesday showed a 4.5 percent decline in local stockpiles in April as output growth was less than expected. Production rose 6.7 percent from March to 1.30 million tonnes, compared with a 13.2 percent jump to 1.69 million tonnes in April last year. At the same time exports continue to climb.
Exports of Malaysian palm oil products for May 1 to May 10 rose 21.9 percent to 391,222 tonnes from the same period a month ago, cargo surveyor Intertek Testing Services said on Tuesday. Societe Generale de Surveillance showed a 32.3 percent rise in exports during the period. In competing vegetable oils, the September soyabean oil contract on the Dalian Commodity Exchange rose 3.3 percent, while the Chicago Board of Trade soyaoil contract for July dipped 0.03 percent.
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