Palm oil hits two-month high
January 03, 2013
Malaysian palm oil futures rose to a 2-month high on Wednesday as the United States averted a fiscal crisis and as traders look forward to better demand for the edible oil on a lower export tax structure. Investors were relieved after US lawmakers approved a deal preventing huge tax hikes and spending cuts that would have pushed the world’s largest economy into recession and hurt global commodity demand.
Market players were also betting on Malaysia’s zero export tax in January to spur demand and help clear record-high stocks. “The zero export tax will be long-term positive. But the short-term impact may be neutralised by tighter edible oil import rules by China,” said Alan Lim Seong Chun, research analyst with Malaysia’s Kenanga Investment Bank.
At market close, the benchmark March contract on the Bursa Malaysia Derivatives Exchange gained 2.7 percent to 2,503 ringgit ($825) per tonne, off its intraday high at 2,524 ringgit, a level last seen since November 2. Total traded volumes stood at 33,431 lots of 25 tonnes each, higher than the usual 25,000 lots. Traders are looking out for official data on Malaysia’s palm oil December inventory level due next week, which is expected to ease slightly from November’s record-high 2.56 million tonnes. But they said the drop could be limited as Malaysian palm exports during December fell as much as 7.9 percent from a month ago, according to cargo surveyor data.