Malaysian palm oil up

Malaysian palm oil futures closed higher on Tuesday on strong exports, but gains were limited by caution ahead of a key US report this week that could show a rise in soybean stocks, which could mean larger supplies of a competing edible oil. Any rise in soyoil supply comes as Malaysian palm oil stocks hit a 21 month high in September, potentially pressuring benchmark palm oil futures that have lost more than 25 percent so far this year.
"The market is all friendlier on the exports data. Also, the US Department of Agriculture report will set the tone for the rest of the week," said a Malaysian trader in Kuala Lumpur. December palm oil futures on the Bursa Malaysia Derivatives Exchange closed up 0.3 percent to 2,801 ringgit ($896) per tonne.
Traded volumes for the December contract stood at 12,761 lots of 25 tonnes each compared with 13,270 lots on Monday. Reuters analyst Wang Tao said palm oil could resume its fall towards 2,690 ringgit per tonne, as a rebound from the Oct. 6 low of 2,754 ringgit could have been completed. Malaysian palm oil stocks surged in September thanks to high production, which may attract buying from large consumers such as India and China.
Cargo surveyor Intertek Testing Services reported a 31.8 percent jump in Malaysian palm oil exports in Oct. 1-10 to 496,918 tonnes from the same period a month ago. Crude palm oil shipments alone were up 63.3 percent. Palm oil is still the cheapest edible oil, holding a discount of more than $100 a tonne to competing soybean oil from Argentina. "With production probably yet to peak, palm oil's discount to soybean oil will need to be maintained in the short-term in order to encourage import demand and prevent a substantial stock build, ANZ said in a note.
Pakistan is expected to buy palm oil soon to restock after the Eidul-Fitr and India and China, the world's top buyers of edible oils, are also in the market. China needs to restock after the national day holidays in early October and India is still buying ahead of Diwali at the end of the month. US soyoil for Dec delivery fell in Asian trade. The market was also awaiting the US Department of Agriculture crop production and supply report due on Wednesday that is likely to show higher soy stocks. China's most active May 2012 soybean oil contract also slipped.