Palm oil edges up as exports jump

May 13, 2014- Reuters


Malaysian palm oil futures edged up on Monday after a better-than-expected export data for the first 10 days of the month signalled stronger demand for the tropical oil as buyers replenished stocks ahead of a Muslim festival. Exports of Malaysian palm oil products between May 1 and May 10 surged about 28 percent to 391,856 tonnes compared with a month ago, cargo surveyor Intertek Testing Services reported, on the back of stronger demand from India, China and Europe.

“This month’s demand will generally be better. People are anticipating exports to rise between 7-8 percent month-on-month,” another Kuala Lumpur-based trader said. “If the full exports does not maintain this, then prices may come under pressure.” The Holy month of Ramazan, which begins in late June and followed by the Eidul-Fitr celebration in July, typically drives up consumption of the tropical oil that is used as cooking oil and in a wide range of foodstuff.

By the close, the benchmark July contract on the Bursa Malaysia Derivatives Exchange edged up 0.5 percent to end at 2,589 ringgit ($800) per tonne. Malaysian markets will be closed on Tuesday for Wesak Day. Malaysia’s palm oil stocks at the end of April rose 4.6 percent to 1.77 tonnes at the end of March, industry regulator Malaysian Palm Oil Board (MPOB) said after the market’s afternoon break on Monday. A Reuters poll had forecast stocks to rise to a three-month high of 1.70 million tonnes. Total traded volume stood at 24,262 lots of 25 tonnes, below the usual 35,000 lots.

After the close, cargo surveyor Societe Generale de Surveillance said exports of Malaysian palm oil products for May 1-10 rose 25.9 percent. Technicals showed that the bearish target at 2,519 ringgit per tonne has been aborted, as palm oil has managed to climb above a resistance at 2,572 ringgit, said Reuters market analyst Wang Tao. Malaysia, the world’s second-largest palm grower, will witness dry weather from mid-May to September, the Malaysian Meteorological Department said. Lesser rain could curb the growth of fresh palm fruit, resulting in lower yields of crude palm oil.

The department however warned that there is now a 70 percent possibility that the El Nino weather phenomenon will occur in the second half of this year, although the impact will be delayed and it may take a few months before the severity of the drought will be known. “The El Nino will most probably begin next month or July, but the impact is not instantaneous,” the meteorological department’s spokesperson Mohd Hisham Mohd Anip told Reuters.

“The intensity has not been determined yet. It will take 1-2 months before the impact comes to Malaysia,” he said, adding that the drought will likely affect Sabah and Sarawak first. The Borneo states accounts for nearly half of the country’s total palm production. In competing vegetable oil markets, the US soyoil contract for July added 0.3 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.1 percent.

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