Malaysian palm oil rose one percent on Monday, with the benchmark futures contract firmly crossing the 1,400-ringgit barrier on confidence over exports after key buyer India cut base import prices. A slight rebound in electronic Chicago soyoil futures trade in Asian trading hours also boosted sentiment in palm oil.
The benchmark third-month December palm oil contract on Bursa Malaysia Derivatives closed up 15 ringgit to settle at 1,414 ringgit ($375.17) a tonne.
Its high for the day was 1,416 and the low 1,396.
The third-month contract has gained 1.5 percent since Friday. It last stood above 1,400 ringgit almost two months ago, when it closed at 1,408 on July 21.
Other traded months ended up 12 to 21 ringgit.
Volume was heavy at 7,964 lots of 25 tonnes each. Friday's trade was just 3,133 lots.
"There's a quite a bit of covering going on as the festive demand everyone had anticipated is finally kicking in," said a futures trader.
September usually marks the start of one of the busiest periods in shipments of palm oil, when Pakistan, the Middle East and India import more oils to make special food and cakes for the Muslim Ramazan and Hindu Diwali festivals in November.
India, the world's largest edible oil importer, cut base import prices of palm and soyoil across the board on Friday, a move that local traders said might spur imports. India uses base prices to calculate duties on imported oil.
New Delhi cut the base price of RBD palm oil, the top refined product for palm oil, to $418 a tonne from $429. For other refined palm oils, the base price was reduced to $408 from $426.
The new base price for crude palm olein was $414 a tonne, from $432 previously, while that of RBD palm olein base was reduced to $427 from $438.
Dealers in Kuala Lumpur said the market was also up on expectations of strong export numbers on Tuesday from cargo surveyors Intertek Testing Services and Societe Generale de Surveillance.
The two surveyors will issue estimates for the first 20 days of September versus the same period of August.
They are expected to quote above 800,000 tonnes for September 1 to 20 - about 9 percent higher than the 732,000 tonnes they averaged for August 1 to 20. A week ago dealers had said fundamentals for palm oil did not look too positive after a government agency reported that oil production grew 5.6 percent in August from July, more than the 4 percent the market had been expecting.
And palm oil shipments were still slow.
"Things are different now," said another trader in Kuala Lumpur. "I'd say 1,400 ringgit could be a good support for the next two weeks, with 1,450 the resistance."
Prices of physical palm oil also rose on shipment expectations. September crude palm oil saw offers at 1,410 ringgit a tonne and bids at 1,400 in the southern and central regions of Malaysia.
Trades were reported at 1,395-1,400 ringgit.
PALM OIL FUTURES
September (south): 1410.
Open/High/Low: 1402/1416/1396.
Previous close: 1400.
PALM OIL PHYSICALS:
December (3rd month): 1414.
Previous settlement: 1399.
FUTURES:
Benchmark December up 15 ringgit at 1,414 ringgit ($374.90) a tonne as exports grew and India cut base import prices.
PHYSICALS: Also up on strong shipment indications.