SINGAPORE: Malaysian palm oil futures rose to a fresh 13-month high on Monday, buoyed by expectations of lower stocks that come as demand shifts away from tightening South American soyoil supply.
Palm oil recorded an almost 5 percent gain last week as traders bet on higher demand for the tropical oil following damaging drought in soy-exporting Argentina and Brazil and US data showing farmers will plant less soy this season.
A Reuters poll last week showed March palm oil stocks fell to a seven-month low as strong export demand chased weaker production growth. Industry regulator Malaysian Palm Oil Board will issue the widely watched data on Tuesday.
"The market's reflective of tomorrow's series of data release. It's buying hype while technical is also bullish," said a dealer with a foreign commodities brokerage in Malaysia.
By the midday break, benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange gained 0.4 percent at 3,618 ringgit ($1,178) per tonne after going as high as 3,623 ringgit, a level not seen since March 8 last year.
Traded volumes were thin at 9,647 lots of 25 tonnes each, compared to the usual 12,500 lots.
On the technicals front, Reuters market analyst Wang Tao posted a bullish view, saying palm oil will surge to 3,691 ringgit per tonne, as it has cleared a resistance at 3,590 ringgit.
Traders are hopeful that export demand, which rose in March on the back of tighter soybean supplies, will continue to pick up this month. Exports recorded a less than 5 percent gain in March from a month ago, snapping four straight months of declines.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will release Malaysian palm oil exports data for the first 10 days of April on Tuesday.
Brent crude slipped below $123 as Iran agreed to resume talks that had collapsed more than a year ago on the country's nuclear programme with the United States and its allies, raising hopes of a peaceful resolution to the standoff.
In other vegetable oil markets, the most active US soyoil contract for May edged up 0.7 percent while the most active Dalian soyoil September contract rose 0.8 percent, breaching the 10,000-yuan mark for the first time since Sept. 22 last year.
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