Palm hits 1-week high on firm commodities, equities

Asian shares rose on Tuesday after modest gains on Wall Street, but remained deep in negative territory for the month.

"Stocks stabilised in early Asia hours, which with strong soyoil, soybean and crude oil markets have pulled palm oil higher," said a trader with foreign brokerage in Kuala Lumpur.

He added that solid overseas demand is also giving some support to palm oil after cargo surveyor Societe Generale de Surveillance on Monday reported exports in Aug. 1-20 up nearly 14 percent to 1.17 million tonnes from last month.

"We are moving into the last quarter of the year with more festivals ahead. End stocks in August are likely to drop below 2 million tonnes," the trader said.

By midday, the benchmark November crude palm oil contract on Bursa Malaysia Derivatives rose over 1 percent to 3,055 ringgit ($1,028.80) after going as high as 3,057 ringgit -- a level unseen since Aug. 15.

Overall traded volume was light at 9,876 lots of 25 tonnes each, compared to the usual 12,500 lots.

"The market is likely to stay supportive until the Eid festival as investors are short covering before the long break," said another trader in Kuala Lumpur, referring to the Islamic festival due to start at the end of this month.

The festival is likely to lift palm oil prices due to slower output from main producers Indonesia and Malaysia, which supply over 90 percent of total global demand, as plantation workers take holidays to celebrate.

Chicago new-crop December corn climbed to a contract high on Tuesday, while soybeans rose to a near one-month top as the condition of the US corn and bean crops continued to slide, raising concerns over supplies.

Brent crude rose toward $109 while crude oil was steady above $85 on Tuesday as fighting in Libya continued and in anticipation of a fall in US crude stockpiles.

Other vegetable oils were higher.

US soyoil for September delivery rose 0.4 percent, and the most active May 2012 soyoil contract on China's Dalian Commodity Exchange rose 0.6 percent.

"China's soyoil is tracking firmer overseas markets, but traders are cautious due to worries on weak global economics," said Zhan Zhi Hong, an oil analyst with Shenzhen-based China Merchants Futures.

"We expect a little pressure on prices starting September as it is the beginning of the soybean harvest season in China and US".

Copyright Reuters, 2011