SINGAPORE: Malaysian crude palm oil futures rose to a nine-month high on Wednesday as recovering exports raised demand prospects for the edible oil and upbeat US economic data lifted investor confidence.
While the US Federal Reserve provided few clues on further monetary easing, it offered a slight upgrade to its economic outlook, which together with rising retail sales reinforced the view that the world's biggest economy is on the road to recovery.
A recovery in Malaysian exports for the first ten days of March has also helped palm oil extend its gain to 6.8 percent this year, although optimism was somewhat clouded by an unexpected rise in February palm oil stocks.
"Exports seemed good for the month as we see from the first ten days, we should expect higher exports this month," said a trader with a foreign brokerage in Kuala Lumpur. "Besides that, soybean oil is up and crude oil is still above $125, so these are supportive factors for palm oil."
By the midday break, benchmark May palm oil futures on the Bursa Malaysia Derivatives Exchange rose 0.7 percent to 3,390 ringgit ($1,111) per tonne. Prices touched a new high of 3,395 ringgit, a level unseen since last June.
Traded volumes on Wednesday stood at 6,798 lots of 25 tonnes each, slightly more than half of the usual 12,500 lots.
The rise in stocks in February was due to a slowdown in exports, but early March data showed a 32 percent surge in exports, pointing to stronger demand prospects for this month.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will issue export data for March 1-15 on Thursday.
Brent crude steadied above $126 on Wednesday as expectations for a build in US crude inventories offset improving economic sentiment in the world's top oil consumer.
In other vegetable oil markets, the most active US soyoil contract for May delivery inched up 0.2 percent in Asian trade on worries over tighter supplies due to the South American drought.
The most active September 2012 soyoil contract on China's Dalian Commodity exchange also rose 1.4 percent as China's demand for edible oil remained healthy.
"Prices are going up, tracking soybean oil in external markets. Recovering Malaysian palm oil exports in early March also provided support," said Zhang Ru Ming, research manager with Liangyun Futures in Dalian.
"Right now the market is looking out for the official planting forecasts from the US Department of Agriculture due end of the month to get a gauge of soybean output for the year," he added.
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