Malaysia palm oil futures climbed 0.9 percent on Tuesday on concerns of hot weather affecting US grain crops and talk of higher exports. The health of US corn and soybean crops have declined more than expected last week as drier weather affected key growing areas and stunted development of late planted fields, according to a government report.
Palm oil has fallen almost 18 percent so far this year on ample stocks as well as jittery markets on account of debt default threats in US and Europe. "The developments in grain markets have reversed some of the losses made earlier today from news of the sovereign debt problems. Ofcourse, the market is going to be torn between these two issues and will be volatile," said a trader with a foreign commodities brokerage.
The benchmark October crude palm oil contract on Bursa Malaysia Derivatives settled up 29 ringgit at 3,107 ringgit ($1,031) a tonne. Earlier in the session, it hit the lowest since July 13.
Overall traded volume stood at 26,793 lots of 25 tonnes each, compared to the usual 25,000 lots. Traders eying Malaysian palm oil exports data on Wednesday are expecting a July 1-20 shipments to hit 1.02 million tonnes, up about 5 percent from the same period a month ago but this may do little to curb production and stocks rise.
Malaysia's June palm oil stocks inched up to the highest in 18 months at 2.05 million tonnes from a month ago as overall production was higher than exports. Production stood at 1.75 million tonnes. US soyoil for August delivery rose 0.6 percent and reversed losses from the previous session after a government report showed more-than-expected declines in crop ratings due to the hot weather. In China, the most traded May 2012 soyoil on Dalian Commodity Exchange fell 0.1 percent, taking a cue from weak US soyoil in the previous session.