Malaysian palm oil soars

Malaysian palm oil futures rose 1.5 percent to hit near one-month highs on Wednesday as firmer commodity markets and expectations of higher export demand lifted sentiment. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance on Tuesday showed Malaysian palm oil exports during the first 20 days of this month rose 5.4 and 5.7 percent respectively, compared to the same period a month ago.
"It's an upbeat sentiment as commodity markets such as grains futures, crude oil and energy rallied overnight and at the same time Malaysia's palm oil exports are good," said a trader with foreign brokerage in Kuala Lumpur.
The benchmark October crude palm oil contract on Bursa Malaysia Derivatives rose 46 ringgit to hit the highest level since June 23 of 3,153 ringgit ($1,048.815) per tonne.
Overall traded volume was 33,205 lots of 25 tonnes each, from the usual 25,000 lots. Traders said higher overseas demand comes at a time when output may slow with plantation workers in world's top producers - Indonesia and Malaysia - taking a long break in August for a key Muslim festival. A Reuters technical analysis showed Malaysian palm oil prices may rise to 3,180 ringgit per tonne, as indicated by an ascending channel.
But, a five percent export duty cut in Indonesia starting August might keep a lid on prices, trader said. "Malaysia palm oil prices have to be lower to compete with Indonesia palm oil as the 5 percent reduction in tax equates to about 50 dollar saving," another trader in Kuala Lumpur said.
Crude oil rose in Asian hours, supported by hopes of a US debt deal, a weakening dollar against the euro and tightening crude stocks in the world's largest oil consumer. US soyoil for August delivery rose 0.7 percent on Wednesday thanks to concerns over hot weather affecting grains and the most active May 2012 soyoil contract on China's Dalian Commodity Exchange climbed 0.7 percent.
"The current price levels provide a good opportunity for investors to take position, especially after the Chinese government lifted edible oil price cap last month," said Zhan Zhi Hong, an oil analyst with China Merchant Futures in Shenzhen. She added: "Despite relatively high soybean stocks, the market sentiment is bullish on the back of better crushing margin."