Malaysian palm oil hit a near 17-month high on Thursday as traders bet the weak dollar may spur more demand for US priced vegetable oil from top buyers China and India. The dollar held near a 15-year low on expectations the US Federal Reserve will shift towards a looser monetary policy and spur another round of quantitative easing - a scenario that has supported equity and commodity markets.
Investors expect the world's top vegetable oil buyers China and India to restock after festival season ends, focusing on palm oil from Malaysia and Indonesia that will go through a seasonal upswing in production and soyaoil from a bumper US crop. Benchmark Malaysian palm oil rose almost 2 percent to 2,786 ringgit ($901.3) after touching an intraday high of 2,788 ringgit - a level unseen since May 13 last year.
"Palm oil is trading in a friendly mode as world-wide commodities and regional equity markets are very supportive," said a trader with foreign brokerage in Kuala Lumpur. Reuters technical analysis showed Malaysian palm oil could trade at a bullish target of 2,750 ringgit. Reuters poll reported Malaysia's September palm oil stocks probably hit a seven-month high as slightly higher output and imports outpaced overseas and local demand.
Market players await industry regulator Malaysian Palm Oil Board unveiling official data on October 11. October soyaoil in Chicago inched up during Asian trade hours ahead of the USDA's agricultural supply and demand estimates due for release on Friday. Analysts said the USDA might pare its soy production estimate due to a downward adjustment in planted acreage in the US even though farmers have been reaping bumper yields. Asian traders are waiting for China's financial markets to open on Friday after one-week holidays. China's Dalian soyoil and palm olein futures often give direction to other vegetable oil markets.