Malaysian palm oil futures ended higher on Wednesday, boosted by early gains in agricultural markets and expectations of a spike in demand during the Muslim fasting month of Ramazan, but gains were capped by worries about the global economy. The benchmark October contract on the Bursa Malaysia Derivatives Exchange closed up 0.7 percent at 3,136 ringgit ($1,059) per tonne.
It earlier hit a peak of 3,144 ringgit, its highest since July 22. Traded volumes for the contract were 9,607 lots of 25 tonnes each, compared to 11,213 lots on Tuesday. "We are also moving into fasting season, therefore production is going to go down and demand much higher," said one Kuala Lumpur-based trader.
He added that the spread between bean oil and palm oil was widening, with 3,150 a resistance level for the latter. Chicago corn edged higher on Wednesday, climbing to an eight-week high after rising by its daily limit in the last session, as concerns over hot weather threatening to curb US crop yields continued to buoy the market. The most active May 2012 soyoil on China's Dalian Commodity Exchange eased.
"There is an expected drop in soyoil production (and) better-than-expected export figures," said a Jakarta-based trader. "Malaysia is also facing shortage of harvesters which would be exacerbated during Ramazan, when workers return to Indonesia, thus affecting production." This week, benchmark palm oil prices have also been supported by rising export data.
Exports of Malaysian palm oil products for July jumped 13.5 percent to 1,628,688 tonnes, cargo surveyor Societe Generale de Surveillance said. Malaysia is the world's second-largest producer of palm oil, after Indonesia. "I don't see it breaking the 3,150 levels yet, despite yesterday's weather scares in the US sending the grain and agriculture complex higher," a second Kuala Lumpur-based trader said.
"But anxiety over the US (economic) situation is dragging down equity markets and is translating into some weaker sentiment." Gains have been capped by persistent worries about the US and global economic outlook after a flurry of weak economic data, and despite the government passing a law to cut spending and raise its debt ceiling.
US crude fell to near a five-week low on Wednesday after ratings agency Moody's assigned a negative outlook to the United States, stoking concern that demand may fall as the world's top oil user faces longer-term fiscal and economic challenges. July's US non-farm payroll number, due Friday, will be a focus for many. Investors are also starting to switch attention to the USDA updated crop forecasts due to be released on August 11.
Comments
Comments are closed for this article.