Malaysian crude palm oil futures rose on Thursday as traders took positions ahead of the long weekend, while they posted their lowest annual gains in two years. Palm oil, which has climbed 42.2 percent this year, was underpinned by concerns of heavy rains curbing supply in Malaysia and Indonesia as well as dry weather sapping soyabean yields in South America.
-- Posts weakest annual gain in 2-year Traders said the earlier correction in palm oil during the day could set the stage for another rally if the weather issues persist. "There was liquidation in the morning for palm oil but some players covered back their positions due to the long weekend holiday and on some expectation of tight supplies in vegetable oil markets," said a Malaysian trader
The benchmark March 2011 crude palm oil contract on Bursa Malaysia Derivatives rose as much as 1.6 percent to 3,792 Malaysian ringgit ($1,227) per tonne, revisiting a 33-month high, before settling at 3,788 ringgit. Overall traded volumes stood at14,510 lots of 25 tonnes each, compared to the usual 15,000 lots, ahead of Malaysian financial markets closing for a public holiday on Friday (Dec 31).
Malaysian palm oil prices have rallied over concerns that rains will affect yield quality and disrupt harvesting but annual gains in 2010 are lower compared to the 57 percent rise in 2009 as worries over the speed of the global economic recovery linger. However, prospects of tightening oilseed supplies due mainly to hot weather in soyaoil exporting Argentina could give a further boost to palm oil and the rest of the vegetable oil complex next year.
Crude oil rising above $91 helped vegetable oil markets and traders say a spike above $100 a barrel may prompt a surge in palm oil and soyaoil, which competes with one another for use in the energy sector. US soyaoil for January delivery gained 0.7 percent in Asian trade hours. China's most active Sept. 2011 soyaoil contract on Dalian Commodity Exchange ended up 0.3 percent after falling earlier in the day.