KUALA LUMPUR (April 21): Malaysian palm oil futures were on track for their second consecutive session of gains on Friday, buoyed by stronger demand ahead of Ramadan and on a technical correction after sharp falls earlier this week.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 0.2%, reaching RM2,508 a tonne at the midday break.
Traded volumes stood at 26,967 lots of 25 tonnes each at noon.
"We are seeing a bit of continued correction after yesterday's rise. Demand to a certain extent is a supportive factor," said a trader from Kuala Lumpur, however, adding that the market may not sustain these gains for long.
"Demand isn't too robust and (future) production will be a factor... it will definitely increase stocks."
The Muslim holy month of Ramadan, which begins at end-May, sees Muslims on day-long fast in countries such as India and the Middle East. The month-long event of fasting and feasting spurs higher palm oil demand for cooking.
Shipments from Malaysia came in weaker-than-expected between April 1 and April 20, according to cargo surveyor data. Intertek Testing Services showed a decline of 1% in exports compared with a month-ago period, while Societe Generale de Surveillance showed a 4.7% rise.
Production is also seen to be rising and pulling down palm prices in the coming months, as the lingering effects of a crop-damaging El Nino wear off.
Malaysian production rose for the full month of March, up 16.3% from February, marking its first monthly gain since September and in line with seasonal trends.
Palm oil may break a resistance at RM2,507 and gain further to RM2,542, said a Reuters market analyst for commodities and energy technicals.
In related vegetable oils, soybean oil on the Chicago Board of Trade slipped as much as 0.3%, while the September soybean oil contract on the Dalian Commodity Exchange climbed up to 0.1%.
The September contract for palm olein rose 0.4%.
Palm, soy and crude oil prices at 0544 GMT
|MY PALM OIL||MAY7||2650||+11.00||2637||2650||95|
|MY PALM OIL||JUN7||2568||+10.00||2550||2571||4100|
|MY PALM OIL||JUL7||2508||+4.00||2492||2511||12764|
|CHINA PALM OLEIN||SEP7||5148||+22.00||5120||5178||345016|
|CBOT SOY OIL||MAY7||31.85||-0.07||31.73||31.97||1542|
|INDIA PALM OIL||APR7||517.40||+1.40||515.00||525.6||421|
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel
(US$1 = RM4.3940)
(US$1 = 64.5750 Indian rupees)
(US$1 = 6.8792 Chinese yuan)