Vegoils Palm oil rises on lower-than-forecast output, short-covering

by **Cals** Tue 05 Jul 2016, 01:29

Vegoils

[size=28]Palm oil rises on lower-than-forecast output, short-covering

By Reuters / Reuters | July 4, 2016 : 7:26 PM MYT

KUALA LUMPUR (July 4): Malaysian palm oil futures rose to a one-week high on Monday, lifted by weaker-than-expected output and short-covering before public holidays.

Benchmark palm oil futures for September delivery on the Bursa Malaysia Derivatives Exchange gained 1.8% at RM2,391 (US$599) per tonne at the close of trade. It earlier reached an intraday high of RM2,402, its strongest level in a week.

Traded volumes stood at 30,596 lots of 25 tonnes each on Monday evening, below the 2015 average of 44,600.

"It could be short-covering ahead of the long holidays, and production is not coming in as expected," said one trader from Kuala Lumpur. Malaysian markets will be closed on Wednesday and Thursday for Eid celebration.

Palm is expected to continue its downward trend after losing 10.2% in June, as production is likely to rise seasonally and exports slow down with Ramadan drawing to a close.

The Muslim holy festival entails a month of fasting followed by communal feasting, boosting demand for palm oil for cooking. Buyers caused a surge in exports while stocking up on supplies ahead of Ramadan in May, leading to expectations of declining shipments in June and July.

Palm oil failed to break a resistance at RM2,402 per tonne and may either hover below this level or retrace to a support at RM2,370 before rising again, according to analysis by Wang Tao, a Reuters market analyst for commodities and energy technicals.

The Chicago Board of Trade soyoil contract for December was closed on Monday for the US Independence Day holiday, while the September soybean oil contract on the Dalian Commodity Exchange rose 2.7%.

The July offer price for crude palm kernel oil stood at RM5,076.12 per tonne in the evening, according to price assessments by Thomson Reuters.

(US$1 = RM3.9940)
(US$1 = 67.2725 Indian rupees)
(US$1 = 6.6630 Chinese yuan)
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