Malaysian crude palm oil futures closed 1.4 percent higher on Thursday after the state-run palm oil board reported a sharp decline in stocks and a steady increase in exports. But dealers said the market, which tocuhed a fresh eight-year high, was ready for a correction after making strong gains in recent weeks.
The benchmark third-month July contract on the Bursa Malaysia Derivatives Exchange finished up 31 ringgit, or 1.4 percent, at 2,320 ringgit ($682) a tonne, after touching a session high of 2,333 ringgit.
"Data from the palm oil board and cargo surveyors is friendly, but I think it is time for a correction and profit-taking," said one dealer. Palm oil has gained more than 18 percent this year after surging 40 percent in 2006 on the back of demand from the biodiesel and food sectors.
The Malaysian Palm Oil Board said the country's April closing stocks fell 11.65 percent to 1,181,320 tonnes, the lowest in nearly two years. The board said palm oil output in April rose 4.11 percent, less than expected, and exports showed steady growth of 5.9 percent.
The market had risen early after cargo surveyor Intertek Testing Services said Malaysian exports of palm oil products rose 8.1 percent to 463,865 tonnes for May 1-10 from April 1-10. Other traded contracts rose between 16 and 120 ringgit in overall trade of 18,709 lots of 25 tonnes each.
In the physical market, crude palm oil for May shipment was quoted at 2,425/2,440 ringgit a tonne for the southern and central regions. Deals were done at 2,420-2,430 ringgit in the southern region.