Malaysian palm oil climbs

Malaysian palm oil futures rose more than 3 percent on Friday, as physical buying and investor fears eased over the impact of the nuclear crisis in quake-hit Japan. The benchmark May 2011 crude palm oil contract on Bursa Malaysia Derivatives closed up 3.2 percent at 3,446 Malaysian ringgit ($1,128) a tonne, off an earlier high of 3,450 ringgit.
Volatile prices of the vegetable oil, used in products such as food, cosmetics, tyres and biofuels, hit a near four-month low of 3,250 on Tuesday but have gained more than 2 percent this week. "There is a lot of activity in the physical market - bargain hunting is going on," said one dealer. "External markets are a lot better than a few days ago."
"Concern about Japan is subsiding," he added. "This week, the downside was a bit overdone, as the Japan situation does not affect palm oil consumption too much." Japanese engineers conceded on Friday that burying a crippled nuclear plant in sand and concrete may be a last resort to prevent a catastrophic radiation release, the method used to seal Chernobyl in 1986.
Traded volume on the Malaysian benchmark stood at 10,488 lots of 25 tonnes each, compared with 12,847 lots on Thursday. ICDX's May CPO futures contract was at 10,125 rupiah per kg, compared to 9,870 rupiah per kg when it opened. Market volume was 222 lots of 10 tonnes each.
Japan imports around 500,000 tonnes of palm oil each year. Global palm oil production was about 45 million tonnes in 2010. In comparable vegetable oil markets, the most-active September 2011 soyoil on the Dalian Commodity Exchange traded at 9,982 yuan versus 9,970 yuan at the open.
Oil rose more than $2 a barrel on Friday after the United Nations approved military action to contain Libyan leader Muammar Gaddafi, heightening geopolitical tensions in the oil-rich Middle East. Palm oil is seen heading for record highs in 2011 on expectations for costly crude oil to bolster biodiesel demand and offset better harvests, participants at a conference in Malaysia said this month. "Near-term, what will support prices more is food-driven demand - China and India re-stocking," said an Indonesia-based analyst.