Malaysian palm oil futures closed higher on Tuesday, driven by increase in soyabean oil prices on the Chicago Board of Trade. The benchmark third-month June contract on the Bursar Malaysia Derivatives Exchange finished up 7 ringgit at 1,977 ringgit ($566) per tonne.
Other traded months rose between 4 and 20 ringgit. "The market has improved slightly in the afternoon session because soyaoil market is holding firm," said one dealer. "If palm oil breaks 2,000 ringgit level, it will maintain the gains." Overall volume jumped to 16,693 lots of 25 tonnes each after days of sluggish trade which saw daily volumes plunge to as low as 2,000 to 3,000 lots.
The benchmark contract rose 1.2 percent on Monday on hopes of better exports and it is off an eight-year high of 2,062 ringgit reached in December when floods disrupted deliveries. Soyabean futures at the Chicago Board of Trade closed firm on Monday, with the new-crop months leading the market higher not just 2007 crops but 2008 as well, traders said.
CBOT soyaoil settled 0.22 to 0.80 cent per lb higher, with May 0.22 cent higher at 30.99 cents per lb. In electronic trade during Asian hours on Tuesday, the May contract was up 0.04 cent to 31.03 cents. Exports of Malaysian palm oil products for March 1-20 rose 0.8 percent to 617,142 tonnes from 612,057 tonnes shipped between February 1-20, cargo surveyor Interlake Testing services said.
Another cargo surveyor, Society General de Surveillance, said exports during the period fell 6.1 percent to 596,774 tonnes from 635,215 tonnes shipped between February 1-20. Palm oil prices are set to jump more than 20 percent by the year-end as global oilseed stocks are run down and demand from the food and fuel sectors surges, industry officials said at a price outlook conference in Malaysia last week.
Malaysian palm oil, which gained almost 40 percent last year, could move slightly downward in the near term, but surging Indian food demand and Europe's insatiable appetite for biofuels will ensure the commodity holds on to the gains this year. In Malaysia's physical market, crude palm oil for March shipment in the southern region was quoted at 1,985/1,995 ringgit per tonne. Trades were done between 1,975 and 1,990 ringgit a tonne.