Malaysian palm oil futures rose to their highest in nearly two weeks on Tuesday, pulling up from three-week lows in the previous session, boosted by a jump in overseas edible oil markets and strong export demand. Traders said overnight gains in US and Chinese soyoil have paved the way for palm to rise, after Malaysian exports surged in the May 1-25 period.
The US July soyoil contract was up 1.2 percent in late Asian trade after reopening following the US Memorial Day holiday. The most active September soybean oil contract on the Dalian Commodity Exchange had climbed 1.8 percent by 1017 GMT, after rising as high as 5,820 yuan ($938.12). Palm typically tracks rival soyoil, a common food and fuel substitute. "Our market could not move much because soybean oil didn't move in the last few days. So when these overseas vegetable oil markets went up, palm just followed," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"The immediate resistance for palm is now 2,200 ringgit," the trader added. "If it can hold above that, then it may move into a new territory." The benchmark August contract on the Bursa Malaysia Derivatives exchange touched an intraday high of 2,192 ringgit, its highest since May 15, before settling at 2,184 ringgit ($602.32) a tonne by Tuesday's close - up 2.2 percent. Prices on Monday had dropped to 2,121 ringgit, the lowest level for this month. Total traded volume stood at 36,944 lots of 25 tonnes each, just above the average 35,000 lots.
Export data released from cargo surveyor Intertek Testing Services reported a 52.9-percent jump in Malaysian palm oil shipments in the first 25 days compared to the same period a month ago, with purchases of crude palm oil rising nearly tenfold. Another cargo surveyor Societe Generale de Surveillance reported a 55 percent increase for the same period to 1.4 million tonnes shipped. Meanwhile, Indonesia's exports of palm and palm kernel oils for April rose 11 percent from a month earlier to their highest since November at 2.254 million tonnes, the Indonesian Palm Oil Association (GAPKI) said in a statement on Tuesday.
Technical charts were also supportive. Palm oil may rise to 2,203 ringgit per tonne, as it has cleared resistance at 2,183 ringgit, according to Reuters market analyst Wang Tao. In other markets, oil fell to around $65 a barrel on Tuesday, pressured by the possibility that US shale oil producers could increase drilling activity and by a stronger dollar.