JAKARTA: Malaysian palm oil futures climbed to a near five-month high on Monday as sentiment on euro zone debt problems improved, with supply and demand fundamentals offering further support for the edible oil.
Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange traded 1.2 percent higher at 3,173 Malaysian ringgit ($1,009). Prices earlier touched a peak at 3,185, a level not seen since June 22.
Traded volumes for the January palm contract were at 2,790 lots of 25 tonnes each, compared with 15,922 lots on Friday.
"The market is pretty firm," said a Kuala Lumpur-based trader. "Everything is up because the sovereign debt issue in Europe abated temporarily."
He added that prices are likely to push through the 3,200 level later this week.
A bullish target at 3,240 ringgit per tonne is unchanged for Malaysian palm oil based on a channel technique, Reuters analyst Wang Tao said.
Asian stocks and the euro rose on Monday on hopes that new technocratic leaders in Italy and Greece will take decisive action to save their indebted nations from bankruptcy and fend off a wider financial meltdown in the euro zone.
Many other commodities rose as risk sentiment improved.
US soyoil for December delivery gained in Asian trade, while China's most active May 2012 soybean oil contract also climbed.
Brent crude held above $114, extending the gains of the previous week on hopes of steady demand growth as concerns over Europe's debt crisis eased.
Benchmark palm prices have fallen about 15 percent this year, partly due to the uncertain global economic picture and demand outlook.
Palm oil sentiment is improving, despite the macro outlook, due to lower production expectations from the fourth quarter, as dominant Southeast Asian producers enter the rainy season.
"The Malaysian weather the next few days is raining," added the trader. "We expect strong demand coming in, with monsoon season leading to lower production."
A weaker version of La Nina may also reappear this year and if the weather pattern develops at the end of this year, it could coincide with the rainy season in top palm oil producers Indonesia and Malaysia.
Last week, Malaysia's government reported a 1.6 percent decline in stocks on the back of strong exports.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance issue Malaysian palm oil exports data for Nov. 1-15 on Tuesday.
"The lower-than-expected palm oil stocks at end-Oct will reinforce the current strength in CPO price, the root cause of which is worries over weather uncertainties," CIMB analysts said in a note.
Comments
Comments are closed for this article.