KUALA LUMPUR (May 11): Malaysian palm oil futures rose on Monday after export data showed a surge in demand in the first 10 days of the month and as the ringgit weakened, but gains were capped by anticipation of bigger stocks in the world's No.2 producer.
Cargo surveyor Intertek Testing Services reported that exports of Malaysian palm oil products for May 1-10 rose 41.3 percent from the same period in April to 458,677 tonnes as shipments to India and Europe doubled, with buyers snapping up duty-free cargoes of crude palm oil.
But despite the sudden jump in demand, with a weaker Malaysian currency making the ringgit-denominated palm feedstock cheaper for overseas buyers, the likelihood of a rise in inventories kept a lid on gains.
After the market closed for the midday break, the Malaysian Palm Oil Board put out figures showing palm inventories at the end of April rose to a five-month high of 2.19 million tonnes, even higher than the market forecast of 2.13 million.
"Our exports were very strong, the ringgit is weak and overseas markets are slightly friendly ... but the market is not showing it," said a trader with a foreign commodities brokerage in Kuala Lumpur, adding that high stocks would hold the market back.
At the midday break, the benchmark July contract on the Bursa Malaysia Derivatives exchange had edged up 0.5 percent to 2,172 ringgit ($603.08) a tonne.
Total traded volume stood at 12,728 lots of 25 tonnes each, in line with the average 12,500 lots.
The ringgit had fallen 0.2 percent to 3.5950 per U.S. dollar by 0441 GMT Monday.
Technicals suggested palm oil could retest resistance at 2,196 ringgit per tonne, with a good chance of breaking above this level and rising more to 2,235 ringgit, according to Reuters market analyst Wang Tao.
In competing vegetable oil markets, the U.S. July soyoil contract was up 0.1 percent in early Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange gained 1.2 percent.
In other markets, crude oil futures were little changed as moves by China to bolster its flagging economy failed to instil confidence that oil demand in the world's largest energy consumer would improve quickly to absorb a global supply glut and lift prices.