Palm oil up on exports, uncertain economic outlook eyed

KUALA LUMPUR: Malaysian palm oil futures rose on Monday on strong exports, although there were concerns that demand may slow as the global economic outlook gets clouded by Europe's debt crisis and prospects of another US recession.

Still-high stocks in top palm oil producers Indonesia and Malaysia have also weighed on the market in recent months, with prices down a fifth since the start of the year.

"There is some recovery in palm oil from the losses last week due mostly to strong exports data," said a trader with a foreign commodities brokerage. "Palm oil should hold up above 3,000 ringgit but it all depends on how the financial markets perform in view of the economic uncertainties."

By midday, the benchmark November contract on the Bursa Malaysia Derivatives Exchange rose 0.6 percent to 3,022 ringgit ($1,013.58) per tonne. It rebounded from a one-week low of 2,990 ringgit struck on Friday.

Overall traded volumes stood at 4,060 lots of 25 tonnes each, less than half the usual 12,500 lots.

Exports were solid so far in August. Cargo surveyor Intertek Testing Services said Aug. 1-20 Malaysian palm oil exports climbed 14.5 percent to 1.17 million tonnes from the same period a month ago.

Another surveyor, Societe Generale de Surveilllance, was expected to report a similar increase.

Higher exports are likely to bring Malaysian stocks well below 2 million tonnes at a time when output tapers off, with workers taking extended leave for the Muslim fasting season that ends with the Eid festival on Aug. 29, traders and planters said.

Brent crude oil futures lost $2 to $102.62 a barrel on Monday as a six-month conflict in oil-producing Libya appeared to enter the decisive phase.

Weaker crude oil weighs on prices of vegetable oil that are increasingly getting channeled into the energy sector to make competing biodiesel.

US soyoil for September delivery inched up 0.2 percent in Asian trader with earlier gains coming from expectations of lower yields in the US Midwest crop belt thanks to late plantings and hot weather stress.

The most active May 2012 soyoil on China's Dalian Commodity Exchange rose 0.6 percent.

Copyright Reuters, 2011