Malaysian palm oil futures hit their highest in nearly four months on Thursday evening, supported by gains in rival oilseed soya on the Chicago Board of Trade and as stock levels remained steady. End-stocks in the world's second-largest producer generally rise in the second half of the year, in line with seasonal gains in production.
Production levels in June had declined as workers went on leave during Ramadan and Eid-al-Fitr. July output is expected to rise from the previous month, but gains so far have not been as strong as expected, lending support to market prices, said traders. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange rose 1.8 percent to 2,677 ringgit on Thursday evening. Earlier in the session, it rose to 2,692 ringgit, its strongest levels since April 7.
Traded volumes stood at 61,814 lots of 25 tonnes each at the close of trade. "Market gains were partly because production is not as strong as expected. Stocks are comfortable, they are not rising as exports are still good," said a Kuala Lumpur-based trader. "Soyaoil on the Chicago Board of Trade was also higher yesterday," he added.
Palm tracks the movements in related edible oils, as they compete for a share in the global vegetable oils market. The October soyabean oil contract on the Chicago Board of Trade rose as much as 0.8 percent, after seeing stronger overnight gains of 0.7 percent in its previous session. In other related edible oils, the September soyabean oil on the Dalian Commodity Exchange was up 0.4 percent, while the September palm olein contract rose 1.4 percent. The palm oil October contract is expected to rise more into a range of 2,675-2,703 ringgit per tonne, according to Reuters market analyst for commodities and energy technicals Wang Tao.
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