Palm Oil CPO slips but posts best monthly gain since Dec 2010

by **Cals** Fri 30 Aug 2013, 23:02

Palm Oil CPO slips but posts best monthly gain since Dec 2010
Business & Markets 2013
Written by Reuters
Friday, 30 August 2013 20:03

SINGAPORE (Aug 30): Malaysian palm oil futures eased on Friday as investors booked profits from this week's rally that was fuelled by forecasts of dry weather in the soy-producing U.S. Midwest, although healthy demand and a still-weak ringgit stemmed the decline.

Bullish factors from expectations of lower soy yields to a weaker ringgit have lifted palm oil this month, sending the tropical oil to its best monthly performance since December 2010 with a 7.5 percent gain.

Palm oil is a close substitute of soybean oil. A weak ringgit currency that helps improve margins for overseas buyers has also supported prices.

Investors also expect August exports to be higher compared to the prior month's after a 7 percent rise during the first 25 days. Cargo surveyor Intertek Testing Services will release the full month's export data on Saturday.

"Optimism on August exports capped the downside ... But any negative surprise on exports will pressure the market once more as it is still overbought," said a dealer with a foreign commodities brokerage in Kuala Lumpur.

On Friday, the benchmark November contract on the Bursa Malaysia Derivatives Exchange lost 1.5 percent to close at 2,404 ringgit ($732) per tonne. Prices traded in a 2,396-2,433 ringgit range.

Total traded volume stood at 39,420 lots of 25 tonnes each, higher than the average 35,000 lots.

Domestic consumption of palm oil in Malaysia, the world's second-largest producer, could jump on its plans to increase palm oil's blend in biodiesel to 10 percent from the current 5 percent, a government official said on Friday.

"By July 2014 the whole country will be using B5 ... we are confident in the very near future we will be moving into B10," PLANTATION [] industries and commodities minister Douglas Uggah Embas told reporters at a press conference in Kuala Lumpur.

"External demand is beyond our control. But at least domestically, with policies executed on biodiesel, we can increase our local consumption," he added.

In other markets, Brent crude oil slipped below $115 a barrel on Friday as fears over supply disruptions in the Middle East eased after Britain said it will not join any military action against Syria.

In vegetable oil markets, the U.S. soyoil contract for December eased 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 1.3 percent.