Palm oil rises to 1-wk high on tight soy supply

KUALA LUMPUR: Malaysian crude palm oil futures touched a one-week
high on Tuesday, as shrinking soybean supplies arising from poor
production in South Americas and a historic drought in the U.S. could
shift more demand to the tropical oil. Although U.S. soybean futures
hit a record high in Asian hours, palm oil's rise was muted due to a
stock build in Malaysia in part due to top producer Indonesia offering
cheaper cargoes for refined products. Traders also priced in higher
production that contributed to the stock build, although strong palm
oil exports on the back of higher shipments for crude products could
help ease stocks a little. "I think palm oil is rising on the back of
soybeans and that's the main reason of the strength in palm oil," said
a trader with a foreign commodities brokerage in Malaysia. "The
unexpectedly high palm oil exports in August also provided some
friendly sentiment. Previously we were expecting stocks at 2.3 million
tonnes, now everybody has cut back stocks by 200,000-250,000 tonnes
based on exports alone." By the midday break, the benchmark November
2012 contract on the Bursa Malaysia Derivatives Exchange edged up 0.1
percent to 3,075 ringgit ($992) per tonne after hitting 3,100 ringgit,
a level last seen on Aug. 27. Total traded volume stood at 14,670 lots,
higher than the usual 12,500 lots. But technicals remain bearish as
palm oil faces a resistance at 3,093 ringgit per tonne, and will
retrace to 3,049 ringgit, said Reuters analyst Wang Tao. Palm oil
exports surged to 1.45 million tonnes in August, the highest seen this
year, bolstered by higher shipments of crude products and a demand
recovery from major food buyers China and India. Another cargo surveyor
Societe Generale de Surveillance will issue August exports data later
in the day.
The El Nino weather conditions will likely be weak
and shortlived, New Zealand scientists said on Tuesday, providing some
relief to plantation owners in Southeast Asia.
Brent futures
rose for a fourth day in Asia on Tuesday, reaching more than $116 per
barrel on persistent hopes for stimulus measures from central banks in
the United States and Europe, with key policy meetings this week and
next. A tight global supply of soybeans also pushed other vegetable oil
markets higher. By 0517 GMT, the most active U.S. soyoil contract for
December delivery jumped 1.9 percent to the highest since September
2011. The most active January 2013 soyoil contract on the Dalian
Commodity Exchange gained 0.7 percent to a fresh contract-high by the
midday break. - Reuters