Palm oil climbs

Malaysian palm oil futures extended gains to hit a two-week high on Friday and posted a near 5 percent increase this week, as a positive export outlook and expectations of Chinese soy re-stocking, offset economic uncertainty. Benchmark December palm oil futures on the Bursa Malaysia Derivatives Exchange closed up 2.2 percent at 2,906 Malaysian ringgit ($925) a tonne. Traded volumes were 10,894 lots of 25 tonnes each, versus 8,095 lots on Thursday.
Supporting prices this week has been strong export data, which came at a time of positive demand expectations ahead of re-stocking efforts in Pakistan and Indian buying ahead of Diwali at the end of the month. Investors were also positioning themselves ahead of Malaysian export numbers due on Saturday from cargo surveyor Intertek Testing Services. "Little direction but slightly higher," said a Kuala Lumpur-based trader. "Tomorrow's exports should be slightly higher than last month, and then you have the Dalian up.
"Yesterday, there was a bit of profit-taking, so today the market adjusts up again." In a volatile trading session on Thursday, benchmark palm prices fell after the US Department of Agriculture made a sharply higher revision to global stocks of nearly every type of grain except US soybeans. China, the world's biggest agricultural products consumer, has swooped in to import copious amounts of corn and soy products from the United States and elsewhere this week, and analysts anticipate further buying.
"Traders and analysts are expecting that China may return to the US soy market before the end of the year," said Ker Chung Yang, investment analyst at Phillip Futures in Singapore. "There will be some spill over affect into palm oil." US soyoil for December delivery rose to its highest level in more than two weeks during Asian trade, while China's most active May 2012 soybean oil contract rose to similar highs.
Investors remain cautious about the long-term demand outlook for commodities, due to eurozone debt problems and slowing economic growth in China and the United States. "In the short term, prices will still be dependent on what happens in the macro economic space," said commodities analyst Chen Xin Yi at Barclays Capital.