Malaysian palm oil futures rose to the highest in more than one month on Wednesday, as investors pinned their hopes on demand recovery ahead of the Muslim holy month of Ramazan. Market participants are counting on restocking ahead of the holy month, which falls in July this year, to drive up consumption in key producers Malaysia and Indonesia.
But gains were muted ahead of the testimony of the US Federal Reserve Chairman Ben Bernanke to Congress coming up later Wednesday, as traders awaited updates on the Fed's stimulus programme aimed at encouraging growth. "We are still seeing rangebound trading here ... traders are counting on Ramazan demand to support prices," said a trader with a foreign commodities brokerage in Kuala Lumpur. "On the macroeconomic front, we are looking out for the Fed's comments that may move the market."
At the market close, the benchmark August contract on the Bursa Malaysia Derivatives Exchange had gained 1.1 percent to 2,360 ($781) ringgit per tonne, a tad off its high at 2,363 ringgit, a level last seen on April 12. Total traded volumes were high at 39,618 lots of 25 tonnes each, compared to the average 35,000 lots. Technical analysis showed palm oil is expected to rise to 2,388 ringgit per tonne, Reuters market analyst Wang Tao said.
Indonesia, the world's top palm oil producer, has set its export tax for crude palm oil at 9 percent for June, unchanged from May, an industry ministry official said on Wednesday. Rival producer Malaysia had earlier announced it will leave its export tax unchanged at 4.5 percent for the same month. In vegetable oil markets, the most-active September soyabean oil contract on the Dalian Commodities Exchange closed 1.2 percent higher, on news that Chinese buyers have cancelled as much as 150,000 tonnes of soyaoil cargoes from South America on ample supplies and low domestic prices. US soyaoil for July delivery inched up 0.1 percent in late Asian trade.