Malaysian palm oil futures rose on Tuesday, in line with rival soyaoil, but estimates of higher output and sluggish exports by the world's top producers limited gains. The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed up 0.46%, or 9 ringgit, at 1,967 Malaysian ringgit ($475.47) per tonne. On Monday, the contract settled at 1,957 ringgit after rising to 1,982 ringgit earlier in the day.
"In the latter half of the trade, palm got some support from the US soyaoil market but palm's gains were limited because of expectations of a strong production and weak exports," said a Kuala Lumpur-based trader. On Tuesday, US soyaoil futures were up 0.8%. Chicago soyabeans added 0.4% to $9.12-1/4 a bushel, having closed down 1.6% on Monday. Meanwhile, the soyaoil contract on the Dalian Commodity Exchange rose 0.3%.
Most traders see the rise in palm oil as temporary, largely because of weak exports. On Friday, cargo surveyor Intertek Testing Services said exports of Malaysian palm oil products for June fell 19.9% to 1,343,428 tonnes from 1,677,639 tonnes shipped during May. Independent inspection company AmSpec Agri Malaysia said exports fell 19.6% month-on-month for the same period.
Expectations of higher output will also put downward pressure on prices, dealers said. Palm oil production typically rises during the third and fourth quarters, and has tended to peak between August and October in recent years. Palm oil may fall to 1,929 ringgit, as it has broken a support at 1,971 ringgit per tonne, said Wang Tao, a Reuters analyst for commodities technicals.
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