Malaysian palm oil futures rose 1.3 percent on Thursday as traders await signs of Asian and Middle Eastern countries stockpiling ahead of the Muslim holy month of Ramadan in August. Countries from Bangladesh to Egypt will start buying more at least two months ahead for Ramadan where fasting in the day is followed by elaborate feasts and dinner gatherings at night.
Stronger demand could help palm oil eventually claw back a loss of 11 percent notched so far this year, which has seen production in Malaysia and Indonesia stage a strong rebound after two years of weak yields, traders said. The benchmark August crude palm oil contract on the Bursa Malaysia Derivatives Exchange rose 43 ringgit to 3,403 ringgit ($1,130) a tonne. On Monday, the contract hit a more than two-month high.
Overall traded volume stood at 25,067 lots of 25 tonnes each. "I was hoping for a decline in prices to lure in these buyers. It would have started earlier, although the strong export data in May and firm external markets have kept prices up," said a trader with a foreign commodities brokerage in Kuala Lumpur.
There are some signs of Ramadan demand, traders said. May exports rose above 1.35 million tonnes, driven partly by strong demand from India with a sizeable Muslim population and mostly-Muslim Pakistan. Malaysian palm oil stocks probably rose to 1.7 million-1.8 million tonnes last month as favourable weather aids output, traders said. Technicals were negative. Palm oil would extend its loss to 3,307 ringgit per tonne as indicated by a Fibonacci retracement analysis. US soyoil for July delivery and the most-active January 2012 soyoil contract on Dalian edged higher. Oil prices fell on Thursday after a delegate from the Organisation of the Petroleum Exporting Countries (Opec) said the cartel was considering an increase in its supply target in a bid to temper prices.