Palm Oil Up

palm oil malaysia
Malaysian palm oil rose 1.8 percent on Tuesday, snapping two sessions of decline as the ringgit weakened, although concerns over slowing global demand for the tropical product and higher production capped gains. The benchmark December palm oil contract on the Bursa Malaysia Derivatives Exchange closed 42 ringgit higher at 2,321 ringgit ($545) a tonne. It earlier fell to 2,260 ringgit, its lowest since October 13, down from last week's two-week high of 2,386 ringgit.

"The ringgit was the catalyst behind the surge ... However demand is getting from bad to worse," said a trader based in Kuala Lumpur. He added that October production estimates from a local palm oil miller association has shown higher production contrary to seasonal trend of lower output. "If these patterns continue, the end stocks for October can hit close to 2.9 to 3 million tonnes. This fear is already creeping into the market."

Traded volume stood at 38,886 lots of 25 tonnes each, above the average 35,000 lots usually traded in a day. Data from cargo surveyors on Monday showed slowing export demand for the vegetable oil, which fell between 8 and 9 percent from October 1-25 compared with the same time period a month ago.

Palm oil is expected to fall to 2,235 ringgit per tonne as it has broken support at 2,264 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao. In other vegetable oil markets, the US December soyoil contract was up 1.4 percent while the January soybean oil contract on the Dalian Commodity Exchange closed largely unchanged.

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