Malaysian palm oil futures rose to their highest in nearly three weeks on Tuesday, posting four straight days of gains, after a market survey showed palm stocks and output in the world’s No.2 producer may be lower than investors had initially feared.
A Reuters survey on Monday showed that Malaysian palm oil inventories may have climbed to a six-month high of 1.91 million tonnes at the end of September, lifted by a 15 per cent surge in production.
Market players are wary that seasonally stronger output and quicker harvesting in September would trump export demand and lead to stockpiles that could quickly grow to record highs again.
"The market had been talking about huge crops, but maybe it might not materialize in September," said a trader with a foreign commodities brokerage.
"The immediate resistance level is at RM2,350," the trader added.
By the mid-day break, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had inched up 0.9 per cent to RM2,338 per tonne. Prices in early trade climbed to RM2,342, the highest since September 18.
Trade was also more lively as Chinese markets, including the Dalian Commodities Exchange resumed trading after a week-long national day holiday in China, traders said.
Total traded volume stood at 12,405 lots of 25 tonnes each, compared with the average 12,500 lots.
Technicals showed Malaysian palm oil has climbed above the October 2 high of RM2,334, and may keep on rising towards RM2,401, Reuters market analyst Wang Tao said.
In competing markets, the US soybean market registered modest gains in the past few sessions, finding support after private analytics firm Informa Economics lowered its estimate for US production of the oilseed.
Tighter supply of soybeans for crushing into soyoil could shift demand to palm oil, a rival vegetable oil.
The US soyoil contract for December rose 1.1 per cent in early Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange rose 0.3 per cent.
In other markets, Brent futures fell slightly but held above US$109 a barrel on Tuesday, as oil production in the Gulf of Mexico returned to normal and the US budget crisis continued to cloud the outlook for demand in the world’s biggest oil consumer.-- Reuters