Malaysian palm oil futures extended gains on Monday, boosted by export data and as risk aversion eased after Washington reached a last-minute deal to raise the US debt limit and escape default. The benchmark October contract on the Bursa Malaysia Derivatives Exchange closed 0.8 percent higher at 3,121 Malaysian ringgit ($1,051.550) per tonne after going as high as 3,136.
Traded volumes for the contract were 11,313 lots of 25 tonnes each, compared to 11,125 lots on Friday. "Support is coming from equity markets as the US resolves its (debt) issues," said a Kuala Lumpur-based analyst. "It's more of a financial fund-flow thing, rather than fundamental to palm oil ... and less risk aversion."
Two days before a deadline to lift the US debt ceiling, the White House and both Republican and Democratic leaders in Congress said on Sunday the compromise would cut about $2.4 trillion from the deficit over the next 10 years. Both the Senate and House of Representatives are expected to vote on Monday.
On Friday, benchmark prices hit 3,080 ringgit - a level unseen since July 19. Favourable crop weather in US grain-growing areas, as well as high palm oil stocks in Malaysia and Indonesia combined to weigh on the market. "I'm expecting flat to firmer prices for the second half of the year," the Kuala Lumpur analyst added. "As we move towards the year end, next year's edible oils supply and demand will play a role, with the balance becoming tighter." Reuters analyst Wang Tao said Malaysian palm oil was temporarily neutral in a range of 3,083 to 3,138 ringgit per tonne.
"External factors are quite good - crude oil and Dalian trading higher," a dealer in Kuala Lumpur said. Brent crude futures hit a 6-week high, topping $120 a barrel, due to a relief rally after Washington reached a last-minute deal to escape default. US soyoil for August delivery eased on Friday, while the most active May 2012 soyoil on China's Dalian Commodity Exchange gained.
Also supporting prices late on Monday, exports of Malaysian palm oil products for July jumped 13.5 percent to 1,628,688 tonnes, cargo surveyor Societe Generale de Surveillance said. "The market is up on good and strong export numbers," said a Kuala Lumpur-based dealer. "Market players expected only 1.59 million." In related news, Malaysia, the word's No 2 palm oil producer, will come up with a certification scheme to ensure the tropical oil is grown without clearing forests and destroying wildlife, a newspaper reported on Monday.