Vegoils Palm rises to 1-1/2 month high, lifted by overseas soy markets

by **Cals** Mon 21 Oct 2013, 19:33

Vegoils Palm rises to 1-1/2 month high, lifted by overseas soy markets
Business & Markets 2013
Written by Reuters
Monday, 21 October 2013 19:10

(21/10/13 18:25:17)

* Palm hovers near 1-1/2-month high of 2,446 ringgit, in early trade
* Malaysia's Oct 1-20 palm oil exports up 3-8 pct -surveyors
* Palm tracks gains in China, U.S. soy markets -trader
* Palm oil may retrace to 2,406 ringgit -technicals

KUALA LUMPUR (Oct 21): Malaysian palm futures jumped on Monday to their highest in 1-1/2 months, lifted by gains in the U.S. and Chinese soy markets, after positive economic data from the Asian giant signalled growing demand for food and fuel.

The U.S. soyoil contract for December rose 0.5 percent in late Asian trade, while the most-active January soybean oil contract on the Dalian Commodities Exchange rose 1.5 percent.

The palm market generally tracks soyoil — a competing vegetable oil used as a substitute for the tropical oil.
"The market is up on the back of China and U.S. soybean oil markets," said a trader with a foreign commodities brokerage.
"Now it's holding at 2,400 ringgit, which is a strong short-term support level," the Kuala Lumpur-based trader added.

Demand for palm was also seen steady, lending support to prices.

Exports of Malaysian palm oil during Oct 1-20, rose three percent to 1,026,488 million tonnes, cargo surveyor data showed early Monday, boosted by buying from Europe and China.

Another cargo surveyor, Societe Generale de Surveillance, showed exports rose 8 percent compared to the same period a month ago.

By Monday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange, had extended the morning's gains to stand up 1.5 percent, at 2,437 ringgit ($769) per tonne. Prices earlier rose to 2,446 ringgit — the highest level since Sept 9.

Total traded volume stood at 25,240 lots of 25 tonnes each, much lower than the usual 35,000 lots.

Technicals are bearish. Malaysian palm oil faces resistance at 2,449 ringgit per tonne and may retrace to 2,406 ringgit, Reuters market analyst Wang Tao said. But he added that a rise to 2,461 ringgit could confirm a break above resistance, leading to a new resistance target of 2,491 ringgit.

Gross domestic product in China's giant economy rose 7.8 percent from a year earlier — its quickest pace this year, giving a boost to commodity markets, including oil.

"The positive outlook in China's economy is likely to support demand for the commodity," Phillip Futures analyst Tan Chee Tat said in a note on Monday, noting that China is the world's second-largest palm oil consumer after India.

Palm oil prices have climbed 5 percent so far in October, fuelled by optimism that output volumes in Malaysia — the world's second-largest producer — may not surge as much as estimated.

Traders and planters say, despite being expected to be the highest-producing month this year, October's pace may show only a tiny increase, leaving stocks below the 2-million-tonne mark.

Stocks now stand at 1.78 million tonnes.

Indonesia — the world's top palm oil producer — kept its export tax for crude palm oil unchanged at 9 percent for November, an official at the industry ministry said. Malaysia will keep its tax at 4.5 percent.

Investors also await the release of nearly three weeks of delayed USDA data, including export sales figures that are likely to show that nearly 3 million tonnes of soybeans were sold to overseas buyers.

In other markets, oil fell on Monday, amid pressure from strong supplies, with losses limited by expectations that the U.S. Federal Reserve will delay reining in its money-printing programme until next year, helping shore up the demand outlook.