KUALA LUMPUR (Sept 12): Malaysian palm oil futures edged up to touch their highest in over three weeks on Friday, with prices recording a second straight weekly gain thanks to firm soyoil markets overseas and a surge in crude palm oil export demand.
A weaker Malaysian ringgit, which dipped 0.3 percent this week, also stoked some buying interest for the ringgit-denominated palm feedstock.
"The market is still firm on the back of strong Dalian, stable U.S. bean oil and ... a weak currency," said a trader with a foreign commodities brokerage in Malaysia.
Despite August end-stocks in the world's No.2 producer swelling to a 17-month high of 2.05 million tonnes, palm prices increased 2.9 percent this week, largely helped by a jump in exports between Sept. 1-10.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange rose to 2,088 ringgit on Friday, its highest intra-day since Aug. 19, before settling at 2,084 ringgit ($652) per tonne at day's close, up 0.8 percent.
Total traded volume stood at 41,698 lots of 25 tonnes, above the average 35,000 lots.
Technical indicators looked positive. Palm oil is expected to rise to 2,142 ringgit per tonne, as it has cleared resistance at 2,055 ringgit, said Reuters market analyst Wang Tao.
Forecasts of bigger supplies of rival oilseeds, however, kept trade choppy and caused palm prices to slip to 2,051 ringgit in early Friday trade, as concerns of an edible oil supply glut continued to hang over the market.
The U.S. Department of Agriculture estimated the U.S. soybean crop at a record 3.91 billion bushels, up 19 percent on the year and above trade estimates averaging 3.88 billion. Projections of soy output in Brazil and Argentina were also raised.
Bigger supplies of soybeans for crushing could channel food and fuel demand away from palm, a common substitute.
But some market players said the removal of crude palm oil export taxes for September and October by the Malaysian government would encourage buying from the world's biggest edible oil consumers India and China, and support prices.
"Prices will stay supported, targeting 2,085 ringgit to 2,120 ringgit or 2,170 ringgit, until we see actual crude palm oil exports during the September-October period and how they could slow the fast rising end-stocks," said a second Malaysia-based trader.
The volume of open positions in Malaysian palm futures, which jumped to a record high of 287,859 contracts on Wednesday, also suggests the market may be bottoming out after diving to its lowest in more than five years, traders and analysts said.
In rival vegetable oil markets, the U.S. soyoil contract for December rose 1 percent in early Asian trade, while the most active January soybean oil contract on the Dalian
Commodities Exchange climbed 1.3 percent.
In other markets, Brent crude oil held above $98 a barrel on Friday as the market rebounded from a two-year low but concerns over weak demand and plentiful supplies, plus a strong dollar, continued to weigh on prices.
Palm, soy and crude oil prices at 1018 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP4 2125 +35.00 2111 2125 16
MY PALM OIL OCT4 2093 +8.00 2070 2103 1716
MY PALM OIL NOV4 2084 +16.00 2051 2088 20244
CHINA PALM OLEIN JAN5 5198 +48.00 5152 5202 564972
CHINA SOYOIL JAN5 5960 +76.00 5888 5968 509606
CBOT SOY OIL DEC4 32.03 +0.32 31.65 32.16 6926
INDIA SOYOIL SEP4 612.55 +2.90 610.50 614.70 5275
NYMEX CRUDE OCT4 93.23 +0.40 92.79 93.67 21844
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 = 3.196 Malaysian ringgit)
($1 = 6.135 Chinese yuan)
($1 = 60.73 Indian rupee)