Palm oil rises

Malaysian crude palm oil futures closed higher on Friday, although gains were capped as investors were wary that rising oil prices could hurt global economic growth and commodity demand. Emerging concerns that No 2 edible oil consumer China's demand for the tropical oil could ease on high stock levels may further depress prices that rose more than 6 percent this month alone.
"China's demand for palm oil will slow down as its economy is slowing and the government is trying to maintain slow growth," said a Singapore-based physical trader with a local trading company. Benchmark May palm oil futures on the Bursa Malaysia Derivatives Exchange inched up 0.1 percent to close at 3,276 ringgit ($1,088) per tonne. Prices hit a high of 3,294 ringgit on Wednesday, the highest since June 9 last year.
Traded volumes were thin at 19,442 lots of 25 tonnes each, compared to the usual 25,000 lots. Reuters analyst Wang Tao said prices will consolidate in a range of 3,244-3,292 ringgit per tonne based on technical analysis. Malaysian palm oil exports for the first 20 days of February fell 2 percent and 0.6 percent from a month ago, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance, respectively. That indicated an improvement in demand prospects compared to a 14 percent decline for the first 15 days of the month. An improving demand outlook for the edible oil has lifted the futures market, which is up 1 percent this week.
But traders were starting to focus on a probable slowdown in Chinese demand. China is the world's second largest palm oil importer. "China's imports of palm oil will definitely be going down as stock level is now at 900,000 tonnes, almost a million tonnes. Normally, stock level ranges from 400,000-500,000 tonnes," said a China-based trader with a foreign trading house. Top palm oil producer Indonesia will keep its export tax for palm oil unchanged at 16.5 percent and its tax on refined palm olein at 8 percent for March, a trade ministry official said on Friday. In related vegetable oil markets, the US soyoil contract for March delivery fell 0.1 percent and the most active September 2012 soyoil contract on China's Dalian Commodity exchange were almost flat owning to depressed demand.