Malaysian palm oil hits two-week high

Malaysian palm oil futures hit a two-week high on Wednesday, stretching gains into a third session on expectations of a drop in stockpiles amid strong exports by the world's second-largest producer of the tropical oil. Benchmark palm oil futures for April delivery on the Bursa Malaysia Derivatives Exchange rose 0.52 percent to 3,097 ringgit ($698) per tonne. The contract had risen to 3,127 ringgit earlier in the day, its highest since Jan. 25.
Traded volumes stood at 44,967 lots of 25 tonnes each.
"If you take all the export numbers from ITS (Intertek Testing Services) and SGS (Societe Generale de Surveillance) and January production numbers, it should see a drawdown in stocks," said a Kuala Lumpur-based trader. Malaysia's palm oil exports in January rose 8.1 percent from a month ago, cargo surveyor ITS said. SGS, another cargo surveyor, estimated a 4.3 percent rise in January exports.
Palm oil inventories likely fell to their lowest in five months at end-January, led by a sharp fall in production and firmer exports, according to a Reuters survey.
"The market is eagerly waiting for MPOB data. It will confirm a sharp drop in the production in January," said another trader based in Kuala Lumpur.
The Malaysian Palm Oil Board (MPOB) is expected to release the data for January at the end of this week.
A drop in crude oil prices, however, limited the upside in palm, traders said. Benchmark Brent crude was 0.35 percent lower at $54.86 per barrel.
Palm oil is expected to rise to 3,128 ringgit per tonne as it has broken a resistance at 3,089, according to Reuters market analyst for commodities and energy technicals, Wang Tao.
"The next resistance will be at 3,128 ringgit, a break above which could lead to a further gain to 3,169 ringgit," he said.
On the Chicago Board Of Trade, the March soybean oil contract gained 0.52 percent.