Malaysian palm oil futures recovered from early session losses to hit a two-month high on Wednesday evening as it tracked gains in rival oilseed soya on the Chicago Board of Trade (CBOT). Palm was down nearly 1 percent at the midday break, hurt by expectations of higher production in July. But the benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange recovered to close up 0.1 percent at 2,629 ringgit ($613.89), and touched an inter-day peak of 2,637 ringgit, its highest since May 23.
Traded volumes stood at 50,319 lots of 25 tonnes each at the close of trade. "Gains in CBOT soyaoil could have lead to covering and technical buying," said a Kuala Lumpur based futures trader. Palm tracks the movements in related edible oils as they compete for a share in the global vegetable oils market. The October soyabean oil contract on the CBOT rose 0.6 percent on Wednesday, in line for its first gain in four sessions.
Rising soyaoil prices would widen its spread with palm oil, making the tropical oil more price competitive. Demand for palm oil is seen rising on a widening price differential with soyaoil, prompting buyers to switch to palm and as key purchasing market China replenishes its palm oil port stocks.
Chinese traders yesterday bought three more palm oil cargoes for shipment in October or November, around 35,000 tonnes in total, according to a report by China National Grain and Oils Information Center (CNGOIC). The report added that traders had booked about 25 cargoes of palm oil for the fourth quarter of the year. In other related edible oils, the September soyabean oil contract on the Dalian Commodity Exchange was down 0.8 percent, while the September palm olein contract rose 0.4 percent.
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