Palm hits 6-week peak tracking soyoil, lower output forecast

KUALA LUMPUR: Malaysian palm oil futures hit their highest in a month and a half in early trade on Monday, aided by gains in rival oilseed soy on the Chicago Board of Trade (CBOT) and China's Dalian Commodity Exchange.

The market was also up on forecasts of falling production ahead of the release of industry regulator data, which came after the midday break on Monday.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange rose 0.8 percent at 2,575 ringgit ($599.26) a tonne at the midday break. It earlier hit a high of 2,585 ringgit a tonne, its strongest level since May 26.

Traded volumes stood at 13,327 lots of 25 tonnes each at the midday break.

"The market is up on external factors, the immediate reaction is to soyoil which has surged higher," said a Kuala Lumpur-based trader, adding that it was also supported by an expected decline in output data.

June production in Malaysia, the world's No.2 palm producer, fell 8.5 percent to 1.51 million tonnes, leading to a decline in end-stocks as well, data from the Malaysian Palm Oil Board showed on Monday.

Inventories dipped 1.9 percent to 1.56 million tonnes, while exports for the full month of June dropped 8.4 percent to 1.38 million tonnes.

"The market could move up more in the afternoon because of the report, but gains could fizzle out in the next few days," said the trader, as production is seen rising on seasonal trend in the coming months and demand weakens.

Shipments of palm oil products from Malaysia fell 1.9 percent during July 1-10, down from the corresponding period in June, showed data from cargo surveyor Intertek Testing Services on Monday.

In other related oils, soybean oil on the Chicago Board of Trade rose 0.6 percent, while September soybean oil on the Dalian Commodity Exchange surged 1.8 percent.

The September palm olein contract was up 1.6 percent.

Palm oil prices are impacted by movements in related edible oils, as they compete for a share in the global edible oils market.