Malaysian palm futures rose 1.6 percent on Monday on signs of tighter stocks, but were off intraday peaks after touching a fresh 7-month high as investors locked in profits from a recent rally, traders said. The benchmark June contract on the Bursa Malaysia Deriva-tives Exchange hit an intraday high of 2,385 ringgit, the strongest since September 23 last year.
The contract settled up 36 ringgit to 2,335 ringgit ($654.49) per tonne. "People think the market is massively overbought. The rally is fundamentally justified on the tightness of stock in the market for vegetable oils. But the way the market moved is too fast," said a trader at a Kuala Lumpur-based brokerage.
The market has rallied recently, supported by hopes for a further drop in palm stocks in the worlds second-biggest producer amid firmer exports. Data from the industry regulator showed on Friday Malaysian palm stocks dropped to a 20-month low of 1,363,657 tonnes in March, while cargo surveyors reported a slight increase in shipments for the first 10 days of April.
"Six months ago, palm stock was 2 million tonnes. Now it is just 1.36 million tonnes. That makes people in the market a bit worried about a slowdown in production," the Kuala Lumpur-based brokerage trader said. He said data of the first 15 days exports in April, due out this week, would be crucial for price direction as it will show whether or not demand is still firm.
The price of the tropical oil - used in various products from soap to biodiesel - has gained 40 percent this year partly supported by depleting stock. Other traded months rose between 43 and 85 ringgit, except for the May contract, which fell 10 ringgit. Overall volume was at 14,825 lots of 25 tonnes each.
INDONESIA PALM TRADES In Indonesia, the worlds top producer of palm oil, palm prices surged on the first trading day after holidays. The Jakarta-based state marketing centre, which normally sells palm oil from state plantations, sold the entire 9,500 tonnes of palm oil it offered at a top price of 8,028 rupiah ($0.453) per kg, up from 7,569 rupiah per kg last Wednesday.
There was no Indonesian trade last Thursday and Friday due to general elections on Thursday and the Good Friday holiday. Producers in Medan - home to Belawan port, Indonesias main palm oil export port - sold palm oil at 8,025 rupiah per kg.
Meanwhile, refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 8,150 rupiah per kg, up from 7,900 rupiah per kg last Wednesday. In the Malaysian physical market, palm oil for April was traded at 2,375-2,390 ringgit per tonne in the southern region and at 2,370-2,390 ringgit a tonne in the central region.