Malaysian palm oil finished in positive territory on Wednesday, tracking other vegetable oils higher after a bullish overnight US agriculture department report but with traders remaining cautious after Greece's debt default. The September palm oil contract on the Bursa Malaysia Derivatives exchange extended earlier gains to close 1.8 percent higher at 2,268 ringgit ($606) a tonne after trading in a range of 2,234-2,268 ringgit.
Palm prices are 0.4 percent lower for the week and trading near one-month lows. "The market is very positive because the USDA report is very positive for the grains complex," said a palm trader with a foreign commodities brokerage in Malaysia. "There is (still) a lot of uncertainty ... so we are back to talking about competitive oils." US soybeans and corn stocks ballooned from a year ago but still missed market forecasts as strong demand ate into supplies, the US Department of Agriculture said on Tuesday.
Both corn and soybean futures surged after the report was released, rallying to their highest since mid-January. Total traded volume for palm was 36,858 lots of 25 tonnes each, compared with the usual 35,000 lots. In other vegetable oils, the US July soyoil contract fell 0.5 percent, while the most active January soybean oil contract on the Dalian Commodity Exchange added 2.2 percent. "It's a sideways market," a second Malaysia-based palm trader said. "The market is up on the strong close on the CBOT." Signals are mixed and will become clear when palm oil gets out of a neutral range of 2,216-2,293 ringgit per tonne, Reuters market analyst Wang Tao said.