Palm reverses losses to touch near 6-week peak
Benchmark November palm oil on the Bursa Malaysia Derivatives Exchange added 0.4 percent to close at 3,078 Malaysian ringgit ($999) per tonne, off an earlier low of 3,036 ringgit.
"Europe woke up," said a Kuala Lumpur-based trader. "Crude and the equity markets rose, but on the palm side there is no strong buying."
Oil traded up near $113 buoyed by European equities, but the upside was capped as the market awaited a bundle of data from the United States for an update on the progress of the economic recovery.
European shares rose after German and French leaders said they were determined to keep Greece in the euro zone, though Swiss bank UBS dropped sharply after it said a trader had lost around $2 billion in unauthorised dealing.
Also a supporting factor for palm sentiment, the dollar rose broadly against emerging Asian currencies, with the Malaysian ringgit hitting a nine-month trough.
A weak ringgit makes palm oil cheaper for refiners and investors holding other currencies.
Capping gains in the edible oil are concerns about a possible build-up in stocks at a time when exports have slipped.
Earlier, cargo surveyor Intertek Testing Services said exports of Malaysian palm oil products for Sept. 1-15 fell 32 percent.
"The market is cautious on the economy and we have some poor exports," said a second Kuala Lumpur-based trader.
Traded volumes for the November contract stood at 12,411 lots of 25 tonnes each, compared with 13,520 lots on Wednesday.
Malaysian financial markets will be closed for a national holiday on Friday.
On Thursday, palm prices peaked at 3,087 -- a level not seen since Aug. 4. Benchmark prices have climbed almost 1 percent this week, with bigger gains capped by a better-than-expected production outlook for the US soy crop.
Earlier this week, the US Department of Agriculture unexpectedly raised its US crop production outlook by 1 percent, despite forecasts for a smaller crop due to hot, dry weather this summer.
US soyoil for October delivery was steady after touching a two-week low on Wednesday, while the most active May 2012 soybean oil contract on China's Dalian Exchange was unchanged.
Against this backdrop, Indonesia, the top palm oil producer, has introduced changes to its export tax.
"The new export tax will favour planters with downstream exposure in Indonesia, could be neutral in the near term for CPO producers in Indonesia and is likely negative for Malaysian planters with downstream facilities," CIMB analysts said in a research note.
Copyright Reuters, 2011