Palm heads for fifth day of gains tracking US soyoil

KUALA LUMPUR: Malaysian palm oil futures traded higher on Monday, in line for their fifth session of gains, tracking strength in related edible oils and ahead of an official September data release later this week.

"Palm oil is trading higher in view of gains in competing vegetable oils," said a futures trader from Kuala Lumpur, referring to soyoil on China's Dalian Commodity Exchange and the Chicago Board of Trade.

Another trader said market was buoyed by expectations of stronger exports, referring to Malaysian palm oil shipment data from cargo surveyor companies Intertek Testing Services and Societe Generale de Surveillance.

The Malaysian Palm Oil Board is scheduled to release official data for September on Oct. 10.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was up 0.5 percent at 2,743 ringgit ($648.46) a tonne at the midday break.

Traded volumes stood at 21,677 lots of 25 tonnes each at Monday noon.

However, traders say gains could be short-lived and prices may drop before the week ends. "I don't think market gains can sustain as there is an increase in Indonesian and Malaysian production," says a Kuala Lumpur-based trader.

Palm oil production typically sees gains in the third and fourth quarter of the year in line with seasonal trend.

September output is seen rising up to 1.84 million tonnes, the strongest in nearly two years, according to a Reuters poll, while end-stocks likely rose 3.2 percent from a month earlier to 2 million tonnes, their highest since February 2016.

Exports are forecast to gain 7.8 percent to 1.60 million tonnes.

In other related edible oils, the December soybean oil contract on the Chicago Board of Trade climbed as much as 0.5 percent.

The January soybean oil contract on China's Dalian Commodity Exchange gained up to 0.6 percent, while the January palm olein contract rose as much as 1.1 percent.

Palm oil prices are affected by the performance of related edible oils including soy, as they compete for a share of the global vegetable oils market.

Palm oil may break resistance at 2,737 ringgit per tonne and rise into a range at 2,765-2,791 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.