Malaysian palm oil futures posted on Wednesday the highest daily gain since October 2010, lifted by a slowdown in inventory build-up in the world's second largest producer and a demand recovery for the edible oil. Malaysia's October palm oil stocks inched up 1.1 percent to a record 2.51 million tonnes, but the rise fell short of market expectations of a 7.5 percent rise in stocks to 2.67 million tonnes.
Cargo surveyor data pointed to a demand recovery as palm oil's steep $300 discount to soyabean oil has encouraged some buyers to shift to the cheaper edible oil and November 1-10 exports rose as much as 22 percent from a month ago. "We expect the lower crude palm oil price and the substantial discount to soybean oil price would stimulate export demand in the months ahead," James Ratnam, an analyst with Malaysia's TA Securities, said in a research note.
At the close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange posted a 4.4 percent gain at 2,425 ringgit ($792) per tonne. Prices fell to a 3-year low at 2,220 ringgit on Monday, but rebounded strongly after the release of the October stocks data. Total traded volumes surged to 33,855 lots of 25 tonnes each after a quiet morning session ahead of the Islamic New Year holiday in Malaysia on Thursday. Palm oil is expected to keep rebounding to 2,447 ringgit per tonne, said Reuters market analyst Wang Tao based on a wave cycle analysis. In other vegetable oil markets, US soyaoil for December delivery edged up 1.7 percent in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 0.5 percent higher.