Strong demand for Malaysian palm oil, mainly from China and Europe, is likely to boost prices and exports after months of slowdown, planters and traders said on Wednesday.
Malaysian palm prices have started firming up because of an increase in shipments to China and Europe, the world's top palm oil buyers, and the trend is expected to continue, they said.
"A lot of buying is taking place," said an official at a plantation house in Kuala Lumpur, who declined to be named. "Chinese are buying for festivals and Europeans are buying to replenish their stocks." Two big refineries were aggressively selling palm products to Europe, she said.
Traders expect Malaysia's palm oil exports to rise to around 1.2 million to 1.3 million tonnes in July from 1.08 million tonnes estimated in June by cargo surveyor Society General de Surveillance. Exports stood at 1.16 million tonnes in May.
China was likely to buy more in July from around 268,430 tonnes a month ago but it was difficult to estimate the quantity, the traders said. Malaysian crude palm oil futures edged marginally lower on Wednesday, with the market lacking direction due to the closure of the Chicago Board of Trade's soyaoil futures market for the Fourth of July holiday.
"The market is just drifting, but it has not fallen much," one trader said. "The market is still supported by demand." The market rose most of last week after days of dull trade. The benchmark third-month September contract on the Bursar Malaysia Derivatives was down one ringgit at 1,488 ringgit ($408) a tonne.
Other contracts were down one to four ringgits. If the benchmark third-month broke the 1,500-ringgit level, then it would test 1,520 ringgit, traders said. The Chicago Board of Trade soyabean market closed higher on Monday amid changing weather outlooks that sparked shortcovering before the US holiday, traders said.