China's Dalian soyoil jumped to its highest in more than six months on Thursday after the country returned after a three-day break to price in prospects of tighter soybean supply, setting the stage for a strong opening in Malaysian palm oil futures.
Chinese traders took stock of a US Department of Agriculture report that showed farmers would plant less soybean than expected, further squeezing supplies in the wake of a drought hurting the South American soy crop. Smaller crops would leave less for crushing into soyoil, potentially shifting demand to palm oil in Indonesia and Malaysia where yields are much higher.
"They (Chinese traders) are just playing catch up with the global markets. So we do expect to see a massive upswing in prices," said a Malaysian futures broker with clients from China. The most-active Dalian soyoil September contract rose as much as 2.6 percent to 9,834 yuan per tonne, the highest since September 22. China's financial markets were closed for three days this week. US soyoil for March delivery slipped in early Asian trade. Malaysian palm oil futures will open at 10.30 am (0230 GMT).
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