Palm hits one-month top on lower production outlook

KUALA LUMPUR: Malaysian palm oil futures were slightly higher at the midday break on Wednesday, after earlier hitting a one-month peak on forecasts of lower production in June.

However, trading volumes were thin as the soyoil market on the Chicago Board of Trade (CBOT) is still closed for the US Independence Day holiday, traders said.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was up 0.2 percent at 2,512 ringgit ($585.00) a tonne at the midday break.

It earlier climbed to an intraday high of 2,516 ringgit, its highest since June 5. Traded volumes stood at 6,595 lots of 25 tonnes each.

"Prices extended some gains in the absence of rival oilseed soyoil and on concerns of lower June production," said a Kuala Lumpur-based futures trader.

"The continuous gain in China palm olein may also lift market sentiment," he said, referring to refined, bleached and deodorized palm olein on China's Dalian Commodity Exchange.

Palm oil prices are impacted by movements in related edible oils, as they compete for a share in the global edible oils market.

September soybean oil on the Dalian Commodity Exchange fell 0.2 percent, while the September palm olein contract was up 0.9 percent.

Palm oil output in Muslim-majority Malaysia, the world's second largest producer, is expected to decline or stay flat in June, due to the Ramadan and the Eid-Al-Fitr holiday period.

The holy month of Ramadan and Eid, which marks the end of the fasting season, was celebrated by Muslims in June this year, leading to a shortage of workers to harvest fruit.

Palm oil may rise into a range of 2,522-2,534 ringgit per tonne, as it has broken above a resistance at 2,503 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.