Palm oil moves up

Malaysian crude palm oil futures rose to a near two week high on Thursday as traders focused more on heavy rains potentially disrupting production than fixating on concerns of eurozone debt crisis eroding global economic growth. Palm oil is 18 percent down this year so far, weighed down by gloomy economic outlook driven by eurozone debt crisis although strong fundamentals like wet weather have helped cap losses.
"The market has shifted from demand driven to output driven. There's short covering on weather vagaries," said a trader with a local commodities brokerage, referring to the heavy local rain fall as well as the La Nina weather pattern. Benchmark March palm oil futures rose 0.8 percent on the Bursa Malaysia Derivatives Exchange to close at 3,097 ringgit ($980) per tonne, a level last seen on December 9.
Traded volumes stood at 23,013 lots of 25 tonnes each, a tad thinner than the usual 25,000 lots as some investors were closing out positions ahead of the year-end. Top palm oil producer Indonesia has kept its export tax for crude palm oil at 15 percent for January, unchanged from previous month, an industry ministry official said on Thursday.
On the weather front, the Malaysian Meteorological Department kept its earlier warning of heavy rains that may last till Thursday in Johor, a key oil palm growing state that accounts for a fifth of national output. "Weather play is still in everyone's mind, that's why you see a slight upside," said another dealer with a foreign commodities brokerage.
Production is already easing partly due to seasonally weaker yields but exports from Malaysia are also falling, giving some breathing space to palm oil stocks that have started to tighten a little. Cargo surveyor data showed Malaysian palm oil exports for the first 20 days of December fell by 10 percent, as top buyers such as India and China slow orders before the year end.
US soyoil for January delivery edged up 0.3 percent on concern over dry weather hurting South American soy yields. The most active September 2012 soyoil contract on China's Dalian commodity exchange gained 0.4 percent. "The Dalian market is entering a pretty flat phase right now," said Zhang Ru Ming, research manager with Dalian-based Liang Yun Futures.