Malaysian palm oil rose for a fifth day on Friday as traders bet the weak output trend may extend to the first quarter of 2010 just as China restocks agri-commodities and prepares for Lunar New Year holidays. Heavy rains in palm oil-producing Southeast Asia and a dry spell in soy-exporting South America have boosted vegetable oil markets in recent weeks.
Crude oil going above $90 a barrel could see palm oil and soyoil extend gains, traders say. "Palm oil is likely to reach 3,700 ringgit very soon and I don't think 4,000 ringgit is very far off as our domestic fundamentals and China getting ready for Lunar New Year holiday in February will spur buying," said a Malaysian trader. Benchmark March 2011 crude palm oil futures on the Bursa Malaysia Derivatives ended up 0.2 percent to 3,665 ringgit.
Traded volumes stood at 11,642 lots of 25 tonnes each compared to the usual 10,000 lots. Palm oil posted its best weekly performance in December, as investors are increasingly favouring agricultural commodities as an inflation hedge since food prices in China and India have been high. US commodity markets are closed on Friday for Christmas Eve but the day before, US soyoil hit a fresh 28-month high on hot, dry weather in Argentina and stronger US crushing demand.
The most active September 11 soyoil on China's Dalian Commodity Exchange rose half a percent on Friday as Beijing's vow to maintain a crackdown on price speculation curbed gains related to growing import demand. "Although China says it will import agriculture commodities, imports will not increase tremendously in the short terms as local soybean prices are weaker than imported prices," said an oil analyst in China's Heilongjian province, the main soy producing region. "Imports should recover after the first quarter next year."
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