Palm hits 2 month high on hopes stocks will ease

SINGAPORE: Malaysian palm oil futures climbed to their highest in more than two months on Friday, heading for a fifth straight weekly gain, as investors placed further bets that stocks of the edible oil in the world's No.2 producer would ease in May.

Inventory levels most likely fell from April's 1.93 million tonnes to 1.78 million tonnes in May, the lowest in almost a year, as export demand and local consumption outstripped production, a Reuters survey showed.

Industry regulator the Malaysian Palm Oil Board (MPOB) will release official stocks data on Monday, while cargo surveyors' exports data for June 1-10 due on the same day may also show an improvement compared to a month ago.

"We are seeing more position taking ahead of the MPOB data. On top of that, we are also seeing more orders coming in from India for Ramadan," said a trader with a local commodities brokerage in Kuala Lumpur, referring to the Muslim holy month starting in July that typically boosts consumption.

By the midday break, the benchmark August contract on the Bursa Malaysia Derivatives Exchange was up 1 percent at 2,459 ($795) ringgit per tonne, just slightly below its intraday high at 2,462 ringgit, its loftiest since March 27.

Total traded volumes stood at 16,157 lots of 25 tonnes each, higher than the usual 12,500 lots.

Technicals showed palm oil is expected to peak around 2,457 ringgit per tonne, as indicated by its wave pattern, Reuters market analyst Wang Tao said.

For the week, prices were on track to post a 2.6 percent gain, as market participants expected lower stocks and higher restocking demand from India and Pakistan.

In other markets, Brent oil rose towards $104 a barrel, supported by a weak dollar and expectations the Federal Reserve will stick with its stimulus, setting the contract on course for the biggest weekly gain since late April.

In vegetable oil markets, US soyoil for July climbed 0.3 percent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange gained 1 percent.