MARKET DEVELOPMENT
Malaysian Palm Oil Climbs
Malaysian Palm Oil Climbs
15/11/2011 (Business Recorder) - Malaysian palm oil futures climbed to a near five-month high on Monday as sentiment on eurozone debt problems improved, with supply and demand fundamentals offering further support for the edible oil.
Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange closed 1.9 percent higher at 3,195 Malaysian ringgit ($1,016) per tonne.
Prices earlier touched a peak at 3,198 ringgit, a level not seen since June 22.
Traded volumes for the January palm contract were at 7,476 lots of 25 tonnes each, compared with 15,922 lots on Friday.
"The market is pretty firm," said a Kuala Lumpur-based trader.
"Everything is up because the sovereign debt issue in Europe abated temporarily." He added that prices are likely to push through the 3,200 level later this week.
A bullish target at 3,240 ringgit per tonne is unchanged for Malaysian palm oil based on a channel technique, Reuters analyst Wang Tao said.
Financial markets on Monday greeted the appointments of technocratic leaders in eurozone debt hot spots Italy and Greece with cautious optimism, boosting stocks.
Many other commodities rose as risk sentiment improved.
US soyoil for December delivery gained in Asian trade, while China's most active May 2012 soybean oil contract also climbed.
Brent crude oil rose above $114 per barrel on hopes new governments in Italy and Greece would prevent their economies from collapsing and help avoid financial meltdown in the eurozone.
"Palm is following external markets like crude, Dalian and CBOT," said a second Kuala Lumpur-based palm trader.
"The main culprit is crude, providing support to the vegoil market."
Benchmark palm prices have fallen about 15 percent this year, partly due to the uncertain global economic picture and demand outlook.
Palm oil sentiment is improving, despite the macro outlook, due to lower production expectations from the fourth quarter, as dominant Southeast Asian producers enter the rainy season.
"We expect strong demand coming in, with monsoon season leading to lower production," added the first trader.
A weaker version of La Nina may also reappear this year and if the weather pattern develops at the end of this year, it could coincide with the rainy season in top palm oil producers Indonesia and Malaysia.
On Sunday, top industry analyst Dorab Mistry said erratic weather that is slowing palm oil output growth and strong demand will lift benchmark Malaysian futures to 3,300 ringgit in January.
Last week, Malaysia's government reported a 1.6 percent decline in stocks on the back of strong exports.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance issue Malaysian palm oil exports data for November 1-15 on Tuesday.
"The lower-than-expected palm oil stocks at end-October will reinforce the current strength in CPO price, the root cause of which is worries over weather uncertainties," CIMB analysts said in a note.
"But we do not expect the weather concerns to be sustained beyond 1Q12 when La Nina is expected to go away."
Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange closed 1.9 percent higher at 3,195 Malaysian ringgit ($1,016) per tonne.
Prices earlier touched a peak at 3,198 ringgit, a level not seen since June 22.
Traded volumes for the January palm contract were at 7,476 lots of 25 tonnes each, compared with 15,922 lots on Friday.
"The market is pretty firm," said a Kuala Lumpur-based trader.
"Everything is up because the sovereign debt issue in Europe abated temporarily." He added that prices are likely to push through the 3,200 level later this week.
A bullish target at 3,240 ringgit per tonne is unchanged for Malaysian palm oil based on a channel technique, Reuters analyst Wang Tao said.
Financial markets on Monday greeted the appointments of technocratic leaders in eurozone debt hot spots Italy and Greece with cautious optimism, boosting stocks.
Many other commodities rose as risk sentiment improved.
US soyoil for December delivery gained in Asian trade, while China's most active May 2012 soybean oil contract also climbed.
Brent crude oil rose above $114 per barrel on hopes new governments in Italy and Greece would prevent their economies from collapsing and help avoid financial meltdown in the eurozone.
"Palm is following external markets like crude, Dalian and CBOT," said a second Kuala Lumpur-based palm trader.
"The main culprit is crude, providing support to the vegoil market."
Benchmark palm prices have fallen about 15 percent this year, partly due to the uncertain global economic picture and demand outlook.
Palm oil sentiment is improving, despite the macro outlook, due to lower production expectations from the fourth quarter, as dominant Southeast Asian producers enter the rainy season.
"We expect strong demand coming in, with monsoon season leading to lower production," added the first trader.
A weaker version of La Nina may also reappear this year and if the weather pattern develops at the end of this year, it could coincide with the rainy season in top palm oil producers Indonesia and Malaysia.
On Sunday, top industry analyst Dorab Mistry said erratic weather that is slowing palm oil output growth and strong demand will lift benchmark Malaysian futures to 3,300 ringgit in January.
Last week, Malaysia's government reported a 1.6 percent decline in stocks on the back of strong exports.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance issue Malaysian palm oil exports data for November 1-15 on Tuesday.
"The lower-than-expected palm oil stocks at end-October will reinforce the current strength in CPO price, the root cause of which is worries over weather uncertainties," CIMB analysts said in a note.
"But we do not expect the weather concerns to be sustained beyond 1Q12 when La Nina is expected to go away."