Palm up on global markets despite ample supply

KUALA LUMPUR: Palm oil futures hit a near three-week high on Thursday on the back of firmer grains complex and crude oil, despite growing stocks in No.2 producer Malaysia.

"The external markets and euro debt woes are in play in the market, it's not the demand-supply fundamentals that moves the trade," said a trader in Kuala Lumpur.

"People are looking at the global factors rather than historical data," the trader added.

By midday, the benchmark September crude palm oil contract on Bursa Malaysia Derivatives rose almost 1 percent to 3,112 ringgit ($1,030) per tonne after going as high as 3,139 ringgit -- a level unseen since June 24.

Overall traded volume stood at 9,948 lots of 25 tonnes each, lower than the usual 12,500 lots with some refiners staying at the sidelines at the ringgit currency strengthened against the US dollar, making palm oil feedstock more expensive to process.

Crude oil paused its rally on Thursday after Moody's placed the credit rating of top consumer the United States under review for a downgrade, sparking possibility of a new round of economic stimulus.

Federal Reserve Chairman Ben Bernanke said the central bank could resort to more monetary stimulus if the US economy weakens further.

Other vegetable oils were mixed on Thursday.

US soyoil for August delivery edged down in Asian hours after a strong weather-related rally while the most traded May 2012 soyoil on China's Dalian Commodity Exchange rose 0.4 percent.

Chicago corn and wheat were steady on Thursday, after a strong rally in the last two sessions drove prices to a 4-week top, supported by bullish fundamentals and the possibility of more US Federal Reserve stimulus.

Copyright Reuters, 2011