Palm oil ends higher

October 19, 2013

Palm oil
Palm oil

Malaysian palm oil futures ended higher on Friday, reversing some losses in the morning session after the ringgit eased a little, while hopes of only a slight rise in stocks lifted prices to post their second weekly rise in a row. Prices hit their highest in more than five weeks on Thursday on optimism that output volumes in Malaysia, the world’s second-largest producer, may not surge as much as expected earlier, prompting investors to book profits.

Traders say the palm market is robust on prospects of a meek rise in production growth in October, which along with strong demand could keep stocks below 2 million tonnes in 2013. “There’s some pressure coming in from the strong ringgit – but the current level shows the market is quite resilient. It might try to go up to 2,450 ringgit,” said a trader with a foreign commodities brokerage in Kuala Lumpur. By Friday’s close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had edged up 0.1 percent to 2,402 ringgit ($760) per tonne. Prices earlier dipped to 2,378 ringgit. Total traded volume stood at 28,174 lots of 25 tonnes each, lower than the usual 35,000 lots.

Palm oil prices have risen 3.5 percent so far in October and posted a weekly gain of about 0.9 percent, supported by healthy demand. Cargo surveyor data showed that exports of Malaysian palm oil in the first half of October rose to 781,043-799,853 tonnes, about 7-12 percent higher from a month earlier as purchases from Europe and China increased. “China won’t stop importing palm because they are very price sensitive. The price spread between soy and palm is still in favour of palm,” the trader added. Refined palm olein’s discount to soyoil is currently around $119. Market players will be waiting for export data for the October 1-20 period, due on October 21, to gauge demand.

Production from Indonesia, the world’s top producer, could also be curbed due to a government rule that limits plantation areas to just 100,000 hectares for new palm oil firms, threatening an ambitious output goal of 40 million tonnes by 2020, an industry group said on Friday. In competing vegetable oil markets, the US soyoil contract for December rose 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.1 percent.
Courtesy Reuters

Published in ZaraiMedia.com

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More