Palm oil climbs

December 29, 2012

Palm Oil
Palm Oil

Malaysian palm oil futures touched a near two-month high on Friday, posting a second straight weekly gain as traders expect record stocks in the world’s No.2 producer to ease on lower production and higher shipments. Exports rose slightly for the first 25 days of December from the same period a month ago, thanks to larger purchases from India and the United States, cargo surveyor data showed.

On top of that, heavy rains that could bring floods to key oil palm producing regions in the Southeast Asian country sparked concerns of supply disruptions, raising hopes that inventory levels could fall in December. “The current growing concern is the monsoon that is hitting hard on the east coast and southern part of Malaysia. This theme is likely to play out at least until the second week of January,” said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.

The benchmark March contract on the Bursa Malaysia Derivatives Exchange gained 0.5 percent to close at 2,494 ringgit ($815) per tonne, off an earlier high of 2,515 ringgit per tonne, a level last seen on Nov. 2. Total traded volumes stood at 31,099 lots of 25 tonnes each, higher than the usual 25,000 lots. For the week, palm oil prices climbed 3.6 percent, extending last week’s gain that came after four straight weekly losses.

Traders are hoping that a lower export tax for crude palm oil starting January could spur more demand. Malaysian cargoes are likely to be cheaper than rival Indonesia’s with the former setting its January export tax rate at zero compared to the latter’s 7.5 percent. In competing vegetable oil markets, US soyaoil for March delivery rose 0.9 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange ended 0.7 percent higher.

Courtesy: Reuters

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