Malaysian palm oil futures rose to more than a one-week high on Friday, lifted by strong technical buying although traders said the market could come under pressure next week from weak demand and top producer Indonesia cutting export taxes.
-- Palm oil at highest since April 12
-- Light trading due to Good Friday
-- Market eyes export data
Palm oil made its best weekly gain since early February as some traders say the market has been oversold, but other investors expect prices to fall on a build-up in stocks as production outpaces lagging exports. Indonesia will cut its export tax on crude palm oil in May to 17.5 percent from 22.5 percent this month as international prices have consistently fallen, a move that may shift orders away from Malaysia.
"There is some speculative and technical buying going on. Fundamentally, the market remains bullish and we may see a correction next week," said a trader with a foreign commodities brokerage. Benchmark July crude palm oil contract on Bursa Malaysia Derivatives Exchange rose as much 1.9 percent to 3,375 ringgit ($1,122) a tonne, a level unseen since April 12, before settling at 3,370 ringgit.
Trading volumes were light, with 19,959 lots of 25 tonnes each, compared to the usual 25,000 lots, as it was a market holiday in the US and also in Indonesia for Good Friday and as refiners fretted over the strong ringgit currency. The ringgit hit a 14-year high on Thursday, which makes Malaysian crude palm oil priced in the currency more expensive to process.
Refiners are buying less palm oil as export demand has been low. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will issue April 1-25 Malaysian palm oil exports on Monday and some traders expect the declines to narrow. Palm oil gained support from strong increases in US crude oil and Chicago soyoil on Thursday. The most active January 2012 soyoil contract on China's Dalian Commodity Exchange ended up 0.9 percent on Friday.