Wednesday, 25 March 2015 17:20
KUALA LUMPUR: Malaysian palm oil futures rose on Wednesday as export volumes from the No.2 producer recorded an improvement for the first time in three months, but persistent worries about the outlook for global demand kept a lid on gains.
Data from Intertek Testing Services (ITS) showed Malaysian palm oil shipments between March 1 and 25 rose 3.5 percent to 856,474 tonnes, versus the same period in February, on higher Indian purchases. The last time the data recorded a rise was in late December.
Another cargo surveyor, Societe Generale de Surveillance, showed exports for the same period rose 3.7 percent.
But weak prices of crude oil and rival soyoil, which makes palm oil unattractive, together with signs of slowing growth in key consumer China reigned in prices of the tropical oil.
“With uncertainty in demand and external markets, we are seeing some initial buying,” said Lingam Supramaniam, director at Malaysia-based commodities firm Pelindung Bestari.
“The stronger ringgit, weaker manufacturing reading China, bearish soybean market and big increase in March production could spell trouble for the palm market.”
Factory activity in China, the world’s No.2 economy, dropped to an 11-month low in March, a survey showed.
Malaysia’s monthly palm exports to China have shrunk 28 percent so far in March, the ITS report shows.
The benchmark June contract on the Bursa Malaysia Derivatives had edged up 0.6 percent to 2,168 ringgit ($ 592) a tonne, with prices locked between 2,145 ringgit and 2,172 ringgit.
Total traded volume stood at 40,393 lots of 25 tonnes, above the average 35,000 lots.
The US soyoil May contract was nearly flat in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange lost 0.7 percent.
In other markets, Brent crude oil steadied above $ 55 a barrel, not far above the week’s lows, as more evidence emerged of global oversupply that has filled fuel storage tanks around the world.
Meanwhile, a US Department of Agriculture attache report showed the agency had cut its forecast for Malaysia’s 2014/2015 palm production to 20 million tonnes from 20.5 million tonnes, after unfriendly crop weather hindered yields.
“Damaging floods affecting the East Coast of Malaysia in late 2014, and dry weather during the first quarter of 2014 caused palm oil production to drop 12 percent during the October 2014/February 2015 period,” the USDA said.
Copyright Reuters, 2015
