Malaysian palm oil futures extended gains to hit a ten-day high on Friday, as positive demand expectations supported prices, while investors considered the possible impact of a large Chinese purchase of rival soyoil. The benchmark July crude palm oil contract on Bursa Malaysia Derivatives ended 1.5 percent higher at 3,274 Malaysian ringgit ($1,086) per tonne. It earlier hit a peak at 3,292, a level not seen since May 3. Palm oil prices have dropped 13.6 percent so far this year.
Overall traded volume was at a one-week high at 16,236 lots of 25 tonnes each, compared to 13,513 lots on Thursday. "Palm oil is oversold at the moment," a Kuala Lumpur-based analyst said. "In terms of inventory levels, it's not excessive. Market participants have largely ignored palm oil fundamentals in recent weeks, instead tracking moves in other commodity markets. Late on Thursday, Argentina's Foreign Minister and China's Commerce Minister said China would buy 500,000 tonnes of Argentine soyoil, after a trade dispute last year reduced Chinese imports of the product.
The most active January 2012 soyoil on China's Dalian Commodity Exchange was more than 1 percent higher at 10,056 yuan. ICDX's July CPO futures contract was at 9,495 rupiah per kg, compared to 9,405 rupiah per kg when it opened. Market volume was 2,416 lots of 10 tonnes each. Reaction on the Chinese soyoil deal among vegetable oil traders was mixed.