JAKARTA (Sept 8): Malaysian palm oil futures hit their highest in nearly three weeks on Monday, on concerns about extreme weather in comparative oil-producing countries and as traders cited nervousness in an oversold market.
By the midday break, the benchmark November contract on the Bursa Malaysia Derivatives Exchange was up 1.5 percent at 2,055 ringgit ($647) per tonne, after hitting 2,068 ringgit, its highest since Aug. 21, earlier in the day.
Traded volume stood at 23,305 lots of 25 tonnes each, almost double the daily average of 12,500 lots.
"There is talk of some early frost coming in the United States," said a Kuala Lumpur-based trader with a foreign commodities brokerage, referring to forecasts for potentially unfavourable weather in parts of key corn and soy growing regions in the United States.
Floods in India, the world's fifth-biggest producer of soybeans, also supported sentiment for palm oil, the trader added.
"Our market has already gone so low - for both soy and palm - any kind of bullish fundamental changes will tend to have a knee-jerk reaction," said a Kuala Lumpur-based trader with another foreign commodities brokerage.
"Any small trigger will cause some panic covering."
The U.S. soyoil contract for December edged up 0.9 percent in early Asian trade, while the Dalian market was closed for the Chinese Mid-Autumn festival.
In related news, Indonesia is expected to cut its crude palm oil export tax to zero for October, industry sources in the world's top producer of the tropical oil said, after a similar move by Malaysia aimed at boosting overseas sales of the commodity amid weak demand.
"It has been taken into account in the market," a third trader said on the potential for a lower export tax.
"The market is now well supported because prices have gone too low - any disruption to supply or increase in demand will be very positive for the market."
Last week, benchmark palm prices touched a March 2009 low of 1,914 ringgit, although traders on Monday said they were buoyed by prices remaining above the 2,000 ringgit level.
In other markets, Brent crude continued to fall and stayed below $101 a barrel after disappointing U.S. jobs data outweighed buoyant Chinese export and oil import figures.
On the data front, Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance are due to release palm oil export data on Wednesday, with the Malaysian Palm Oil Board is also set to release its palm oil stocks numbers. - Reuters