21/06/2011 (The News International) - Malaysian palm oil futures rose on Monday, after dropping to a five-week low in the previous session, buoyed by rising export numbers from no.2 producer Malaysia, while near-term positive demand expectations also boosted prices.

The benchmark September crude palm oil contract on the Bursa Malaysia Derivatives Exchange gained 0.5 percent to 3,215 Malaysian ringgit ($1,058) a ton, after hitting an earlier high at 3,221 ringgit.

Exports of Malaysian palm oil products for June 1-20 rose 22 percent to 969,804 tons from 794,322 tons shipped during May 1-20, cargo surveyor Intertek Testing Services said.

“Palm oil is range-bound but a bit higher,” said one palm oil trader. “Export numbers are good ... they are expected to be better than last month because of Ramazan month.

“We are moving towards the Muslim festival — there will be strong demand from countries in the Middle East and Pakistan,” he added.

Palm olein’s discount to competing soyaoil has widened at a time when China and India are restocking. Muslim countries are also in the market to buy extra supplies ahead of Ramazan in August, when vegetable oil consumption rises as fasting in the day is followed by feasts and dinner gatherings at night.

Traded volume for the September contract were at 4,858 lots of 25 tons each, versus a total at 18,364 lots on Friday.

On Friday, benchmark prices touched its lowest level since May 6 at 3,163 ringgit, due in part to growing stock levels.

Stocks in Malaysia are expected to rise above a 16-month high of 1.92 million tons hit last month. While this could draw in more demand, the country is going through a high production period.

Not all market players agree that demand will overcome rising output in Southeast Asian producers.

“We have a bearish view,” said John Rachmat, analyst at Royal Bank of Scotland.

“Both in Malaysia and Indonesia, the weather is so much more conducive to good production this year, compared to last year.

“Out of India and China I do not expect an extra ordinary amount of consumption growth ... (and) a lot of European governments are cutting back on renewable energy subsidies for obvious reasons.” He added that benchmark prices could trade at around 2,500 ringgit at the end of this year.