Malaysian palm oil futures inched up on Monday as slower-than-expected growth in stocks last month and firm export demand in the first ten days of December lifted sentiment. Traders are expecting stronger export demand in the days to come, potentially cutting into record stocks notched in November and supporting benchmark palm oil futures that have fallen xx percent this year.
This decline marks the worst annual performance for palm oil futures since the financial crisis in 2008 although traders said this provides a massive buying opportunity for the edible oil that trades at a $350 discount to competing Argentine soyaoil. "We could see an upward swing in prices this week. The market will be pricing in more positive sentiment," said a trader with a foreign commodities brokerage in Kuala Lumpur.
Benchmark February contract on the Bursa Malaysia Derivatives Exchange settled up 0.7 percent to 2,313 ringgit ($760) per tonne. Total traded volumes rose to 35,330 lots of 25 tonnes each, higher than the usual 25,000 lots. Data from the Malaysian Palm Oil Board showed that November's inventory level rose 2.3 percent to a record 2.56 million tonnes from the previous month. Stocks grew at a weaker than expected pace, giving support to prices during afternoon trade. Firm exports also gave support. Cargo surveyor Societe Generale de Surveillance said Malaysian exports for December 1-10 rose 0.4 percent to 516,841 tonnes from 514,798 tonnes shipped during November 1-10.
Investors are banking on higher shipments in the next few weeks as planters rush to finish their annual tax free export quota allocation of 3.5 million tonnes which expires end of December. In palm oil's competing markets, US soyaoil for January delivery fell 0.3 percent. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange ended almost flat.