Malaysian crude palm oil futures rose 0.4 percent on Monday as traders bet year-end stocks may reach the lowest in four years despite cargo surveyors showing a slowdown in exports. Traders estimated stocks in December could fall by 8.5 percent to 1.5 million tonnes from a month ago, making it the lowest year-end level since 2006 as heavy rains stall harvesting and lower yield quality.
"Lower exports may give some pressure but traders are talking about end-year stocks staying really tight for January and maybe in February," said a trader with a foreign brokerage. Benchmark March 2011 crude palm oil futures on the Bursa Malaysia Derivatives settled up 0.4 percent to 3,518 ringgit ($1,123). Traded volumes stood at 18,308 lots of 25 tonnes each, compared to about 10,000 lots usually traded.
Other traders expect the market to move into losses in the coming days as cargo surveyor Intertek Testing Services reported a 26.3 percent drop in December 1-20 Malaysian exports from a month ago. Another surveyor Societe Generale de Surveillance said exports for the same period tumbled 27.3 percent.
The drop in exports, led by China and the European Union, may give some breathing space to global vegetable oil supplies that have started to tighten on La Nina-driven hotter weather disrupting seasonal output in soy-producing South America. Some traders said the La Nina's heavier rains in palm-exporting Indonesia and Malaysia have not generated the flash floods that can complicate logistics and create artificial supply tightness.
"The doom and gloom is not so bad. Stocks will still be tight but production could stage a faster recovery than expected, if the floods stay away," said a plantation official in Malaysia. Oil prices rose on Monday as forecasts for freezing temperatures in Europe and the US Northeast this week looked to boost heating fuel demand. Other vegetable oils rose, partly supported by weather concerns in the US and Australia hitting the broader agriculture market complex. US Soyoil for January 2011 delivery edged higher in Asian trade hours and the most active September 11 soyoil on China's Dalian Commodity Exchange inched up 0.1 percent.