KUALA LUMPUR (Oct 14): Malaysian palm oil futures rose on Tuesday to snap a three-day losing streak, lifted by anticipation of delays in the record U.S. soybean harvest, alongside hopes that firm demand for palm would hold stockpiles in check.
Reports of variable yields from the U.S. Midwest grain belt and the prospect of delays to the harvesting of the 3.927 billion bushel soybean crop expected by the USDA pushed up front-month soybean prices.
"Concerns over the heavy rainfall disrupting the soybean harvest led to a price surge, which is also supporting palm," said Lingam Supramaniam, director at Malaysia-based commodities firm Pelindung Bestari.
The benchmark contract on the Bursa Malaysia Derivatives Exchange had edged up 0.5 percent to 2,167 ringgit ($664) per tonne by Tuesday's close.
Total traded volume stood at 51,725 lots of 25 tonnes, much higher than the average of 35,000 lots.
The most active January soybean oil contract on the Dalian Commodities Exchange climbed 1.4 percent in late Asian trade, lending support to palm. The U.S. soyoil contract for December was down 0.4 percent, however, shedding some of the earlier gains.
Technicals showed palm oil might have stabilised around support at 2,163 ringgit per tonne and may rise towards resistance at 2,224 ringgit, said Reuters market analyst Wang Tao.
Tao put support at the Oct. 13 low of 2,152 ringgit and said a break below that could trigger a fall towards 2,125 ringgit.
Lingam added that "exports of tax-free crude palm oil until the year-end will keep a lid on the stock build-up".
Malaysia, the world's No.2 producer, announced on Friday it would extend an export duty exemption on the crude grade until December.
Indonesia is also expected to keep its export tax at zero for a second month in November, industry sources said on Tuesday, as the top producer strives to remain competitive with rival Malaysia.
The tax cut could help boost demand for palm, used as cooking oil and to make foodstuff such as chocolates and ice cream, even as countries experiencing the northern winter cut back on the tropical oil, which solidifies in cold temperatures.
Palm oil stocks in Malaysia swelled to an 18-month high of 2.09 million tonnes at the end of September, according to data from the Malaysian Palm Oil Board.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will release data on Malaysia's October 1-15 palm oil exports on Wednesday. Exports in the first ten days of the month were disappointing, falling about 18-19 percent from the same period in September.
In other markets, Brent crude fell below $88 a barrel on Tuesday, returning to a nearly four-year low hit the day before, after the world's energy watchdog cut its estimates for oil demand this year and next.
Palm, soy and crude oil prices at 1014 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT4 0 +0.00 0 2200 0
MY PALM OIL NOV4 2189 +15.00 2174 2198 1945
MY PALM OIL DEC4 2167 +10.00 2155 2185 24553
CHINA PALM OLEIN JAN5 5264 +58.00 5184 5276 671528
CHINA SOYOIL JAN5 5992 +84.00 5946 6002 452840
CBOT SOY OIL DEC4 32.90 -1.60 32.77 33.24 7136
INDIA PALM OIL OCT4 445.00 -1.60 444.40 449.10 944
INDIA SOYOIL OCT4 589.30 +0.50 588.00 592.50 9220
NYMEX CRUDE NOV4 84.87 -0.87 84.64 85.60 27867
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. 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 U.S. dollars per barrel
(1 US dollar = 3.265 Malaysian ringgit)
(1 US dollar = 6.1247 Chinese yuan)
(1 US dollar = 61.41 Indian rupee)