Palm oil rises to 10-week high

February 18, 2014

Palm oil
Palm oil

Malaysian palm oil futures reversed earlier losses to extend gains into a fourth straight session on Monday as expectations of rising demand and of falling output and exports offset a stronger ringgit. By the close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange was up 0.6 percent at 2,682 ringgit ($810) per tonne. Earlier, prices rose to a high of 2,684 ringgit, just under Friday’s peak at 2,688 ringgit, the highest level since December 9.

“Anticipation of lower production in February and improving demand,” a trader with a foreign commodities brokerage said. “There has also been flooding in some (Malaysian) palm growing areas.” Total traded volume stood at 32,658 lots of 25 tonnes, below the average 35,000 lots.

Exports of Malaysian palm oil products from February 1 to February 15 rose 31.7 percent compared with the same period in January, cargo surveyor Intertek Testing Services said on Saturday. After the close, data from Societe Generale de Surveillance showed that exports of Malaysian palm oil products for February 1-15 rose 27.2 percent. Capping price rises was a firmer ringgit, a second trader added.

The Malaysian ringgit rose as much as 0.6 percent to 3.2855 per dollar, its strongest since January 16, on demand from leveraged funds. A firmer ringgit eats into margins for overseas buyers and refiners. In comparative vegetable oils, the most active May soybean oil contract on the Dalian Commodities Exchange was little changed. Higher soyoil prices may push buyers towards cheaper palm instead.

Malaysia, the world’s No 2 palm oil producer, kept its crude palm oil export tax unchanged for March at 5 percent, a government circular showed on Monday. In technicals, Malaysian palm oil may break a support level at 2,648 ringgit per tonne and fall more to 2,624 ringgit as indicated by its wave pattern and a Fibonacci retracement analysis, said Reuters market analyst Wang Tao.Reuters

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