Malaysian crude palm oil futures jumped 4.4 percent on Wednesday, their biggest one-day rise in more than six weeks, as investors covered short positions ahead of a long holiday weekend, traders said. The short-covering has emerged since Tuesday on speculation that palm oil exports could pick up in the second half of September after falling as much as 20 percent in the first half of the month, traders said.
The benchmark December contract on the Bursa Malaysia Derivative Exchange rose 91 ringgit to 2,181 ringgit ($626.72) a tonne. Overall volume was more than double the usual at 24,932 lots of 25 tonnes each. The exchange will be closed on September 21-22 for the Muslim festival of Eid al-Fitr. "I believe a lot of covering is going on. Otherwise, I don't see anything bullish about the market," said a trader at a Kuala Lumpur-based commodities brokerage.
Despite the upcoming holiday, palm production this month was likely to rise and therefore a pick up in exports in the second half of September was crucial to slow the rise in stocks, which jumped to a 6-month peak in August. Cargo surveyor Intertek Testing Services (ITS) and Societe Generale de Surveillance on Tuesday said exports of Malaysian palm oil products for September 1-15 fell up to 20.3 percent to 529,980 tonnes from a month earlier.
INDONESIA PALM TRADES: In Indonesia, the state marketing centre based in Jakarta did not sell any of 12,500 tonnes of palm oil offered in an auction due to low bids. Producers in Medan, home to Indonesia's main palm oil export port of Belawan, did not hold palm oil tender on Wednesday.
Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 6,950-7,050 rupiah per kg against 6,900 rupiah a day earlier. In the Malaysian physical market, palm oil for September delivery was traded at 2,190-2,210 ringgit per tonne in the southern region and at 2,185-2,210 ringgit per tonne in the central region.