KUALA LUMPUR, June 25 (Reuters) - Malaysian palm oil jumped as much as 4 percent on Thursday to hit a one-week high as traders bet on more orders from India after the government said monsoon rains could be below normal for the first time in four years.
The monsoon is a lifeline to Indian soybean farmers who rely on the rains to water their crops, given that only 40 percent of the country's farmland is irrigated. Any impact on soybean harvests will lead to aggressive vegetable oil imports. [ID:nBOM468564]
"Currently Malaysian palm oil exports are within expectations, but investors are short covering on the possibility of more purchases from India," said a trader with a local commodities brokerage.
The benchmark September palm contract KPOc on the Bursa Malaysia Derivatives Exchange rose as much as 90 ringgit to 2,340 ringgit ($662.1) a tonne, a level unseen since June 18, before settling at 2,336 ringgit. Overall traded volume stood at 13,813 lots at 25 tonnes each.
Export trends appear to be on the rebound with cargo surveyor Intertek Testing Services reporting shipments rising 3.9 percent to 1,017,105 tonnes in June 1-25 compared with a 28.3 percent slump in June 1-10.
China and European purchases drove the export growth, although India was still lagging slightly in terms of new orders. [ID:nKLR548267]
Analysts expect palm oil prices, which have pulled back about 17 percent from a 20-month high in early May, to bounce on weak increases in global vegetable oil output and the brewing El Nino weather condition.
"We now believe the market to be oversold, given only minor increases in output this year, compared with last year, and lower exportable stocks," said Standard Chartered analyst Abah Ofon in a note to clients.
"Weather concerns could cap supply expansion over the next 12-18 months and add a substantial premium to prices."
El Nino brings hotter weather to top palm oil producers Malaysia and Indonesia, causing lower palm oil yields 12 months later, and could impede the June-September monsoon in India.
Oil rose above $69 a barrel, giving support to vegetable oil markets, which are increasingly channelled into the biofuel sector, although weather concerns were the key driver, traders said.
U.S. soyoil futures <0#bo:> rose 1.3 percent and the most-active January 2010 soyoil contract DBYF0 on Dalian Commodity Exchange, which gives some support to Malaysian palm futures, gained 1.3 percent.
INDONESIA PALM TRADES
In Indonesia, the world's top producer, the Jakarta-based state marketing centre sold 11,000 tonnes of palm oil out of 13,500 tonnes it offered in auction at a top price of 7,128 rupiah ($0.695) per kg.[OILS/TEND]
$1=3.534 ringgit, 10,250 Rupiah)
No comments:
Post a Comment