JAKARTA (Sept 8): Malaysian palm oil futures hit their highest in nearly three weeks on Monday, on concerns about unfavourable weather in comparative oil-producing countries and as traders cited nervousness in an oversold market.
By the close, the benchmark November contract on the Bursa Malaysia Derivatives Exchange had gained 0.8 percent to 2,042 ringgit ($643) per tonne, after hitting 2,068 ringgit, its highest since Aug. 21, earlier in the day.
Traded volume stood at 59,626 lots of 25 tonnes each, above the daily average of 35,000 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 down 0.2 percent in late 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," the second 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 news, Indonesia's president is against a draft bill that would retroactively limit foreign ownership of plantations to no more than 30 percent, the country's investment chief said, on concerns it may expose the government to possible legal action.
In other markets, Brent crude fell below $100 a barrel for the first time in 14 months as Chinese and U.S. data pointed to slower-than-expected growth in the world's top oil consumers.
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.
Palm, soy and crude oil prices at 1011 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP4 2050 +9.00 2050 2076 45
MY PALM OIL OCT4 2048 +9.00 2037 2077 3748
MY PALM OIL NOV4 2042 +17.00 2027 2068 21625
CHINA PALM OLEIN JAN5 0 +0.00 0 0 0
CHINA SOYOIL JAN5 6030 +10.00 6006 6060 408570
CBOT SOY OIL DEC4 32.42 -0.06 32.35 32.80 6539
NYMEX CRUDE OCT4 92.48 -0.81 92.34 93.62 23672
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
Crude in U.S. dollars per barrel
($1 = 3.1730 Malaysian ringgit)
($1 = 6.1400 Chinese yuan)
($1 = 60.3000 Indian rupee)