Palm oil up on technical buying, strong export data eyed

KUALA LUMPUR: Malaysian palm oil futures rose 1.5 percent on Wednesday as traders continued to adjust their positions and eye strong export data after the market fell to an eight-month low earlier this week.

Traders are on the lookout for Malaysia's June export data due on Thursday, though it is unlikely to offset high inventory at a time when output has increases thanks to favourable weather in major oil palm region of Sabah in Borneo island.

"It's a good opportunity for short covering and the market will rally back to start afresh in July," said a trader in Kuala Lumpur.

The benchmark September crude palm oil contract on Bursa Malaysia Derivatives rose 46 ringgit to 3,109 ringgit ($1,020) per tonne. Overall traded volume was light at 14,821 lots of 25 tonnes each, below the usual 25,000 lots.

"With improving productions, stocks will exceed 2 million tonnes -- it could be even more in August -- so in a long term chart, prices are going to fall," said another trader in Kuala Lumpur.

The falling prices has already attracted buyers from Muslim countries including Pakistan and Iran who were stocking up ahead of the Ramadan fasting observance in August.

Other vegetable oils were firm on Friday on the back of strengthening grains markets as investors waited for a key US government report on acreage and quarterly stocks due later in the day.

US soyoil for July delivery rose 0.7 percent and the most active January 2012 soyoil on China's Dalian Commodity Exchange rose 0.3 percent during Asian hours.

"It's a good opportunity for investors to take positions as soyoil fell below 10,000 yuan per tonne, however uncertainties in global and domestic economy will continue to pressure China's soyoil market," said an oil analyst with a Shanghai-based local brokerage.

Copyright Reuters, 2011