Malaysian palm oil futures rose half percent on Wednesday on robust export growth although traders bet expected stronger production of overall vegetable oil supplies in the coming months could still keep stocks growing and prices weak.
Traders said palm oil may fall to 3,000 ringgit per tonne by end-June as palm stocks are likely to go above a 16-month high hit in May and as the South American soy crop streams in.
"Given the ample supply, the current prices are a bit too high. The export demand is there but that is not enough to lift the market much higher," said a trader with a foreign commodities brokerage.
The benchmark August crude palm oil contract on the Bursa Malaysia Derivatives Exchange ended 15 ringgit higher to 3,268 ringgit ($1,078.370) a tonne. Overall traded volume was 20,420 lots of 25 tonnes each, lower than the usual 25,000 lots.
Exports of Malaysian palm oil products for June 1-15 rose 26 percent to 671,314 tonnes from 533,419 tonnes shipped during May 1-15, cargo surveyor Intertek Testing Services said on Wednesday. While another surveyor Societe Generale de Surveillance showed exports during the same period jumped 16.2 percent to 699,674 tonnes.
Demand was driven mostly by China as well as the Indian subcontinent, which has a sizable Muslim population, and needs to restock ahead of Ramazan where elaborate dinners follow fasting during the day.
US soyoil for July delivery rose 0.2 percent during Asian trade with some support coming from corn. A proposal to end subsidies for the bioethanol industry failed in the US Senate, supporting the agriculture complex. The most active January 2012 soybean oil contract on the Dalian Commodity Exchange rose 0.4 percent after China raised cash reserve ratios for banks on Tuesday to suck out excess liquidity at a time of strong demand for cooking oil and high inflation.
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