KUALA LUMPUR: Malaysian palm oil futures rose in early trade on Tuesday, heading for a second consecutive session of gains, on expectations of stronger export demand and weaker production.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 0.7 percent at 2,468 ringgit ($605.35) a tonne at the midday break. It has declined 5.2 percent so far this month after November’s 7.5 percent drop.
Trading volumes, however, were thin at 7,374 lots of 25 tonnes each at the midday break.
“The market is looking at export figures, positive figures will see some recovery,” said a Kuala Lumpur-based trader, referring to Malaysian palm oil shipment data from cargo surveyors Intertek Testing Services (ITS) and Societe Generale de Surveillance (SGS).
“The market has been beaten down badly, so some positive news can bring it up as all bad news may have been priced in. January and February production, for example, will be lower.”
Exports of Malaysian palm oil products for Dec. 1-25 rose 1 percent from a month earlier, data released by ITS before the midday break on Tuesday showed.
Demand for the tropical oil is expected to improve in the coming weeks, as key buyer China stocks up ahead of the Lunar New Year holidays in February. Palm oil is used for cooking purposes during major festivities.
Production, however, is seen declining until the first quarter of next year in line with seasonal trend.
In other related edible oils, the May soybean oil contract on the Dalian Commodity Exchange was up 0.2 percent, while the Dalian January palm olein contract was flat.
The March soybean oil contract on the Chicago Board of Trade was closed for the Christmas holidays.
Palm oil prices are impacted by movements in other edible oils, as they compete for a share of the global vegetable oils market.
Source: Brecorder.com
