Palm gains on Spain bank rescue; data in focus

SINGAPORE: Malaysian palm oil futures rose on Monday after euro zone
finance ministers agreed on a rescue package for Spain's struggling
banks, temporarily easing concerns that the ongoing crisis could slow
the global economy and hurt commodity demand.
The US$125-billion
bailout calmed some of the fears seen last week that triggered a global
sell-off in financial and dragged palm oil to close at its lowest in
the year.
The palm oil market was cautious ahead of Malaysian
industry report after the noon close although a bigger-than-expected
fall in end-May stocks may lift benchmark futures in the afternoon
trading session.
Traders are also eyeing a supply-demand report
on U.S. and global grains from the U.S. Department of Agriculture
(USDA) due Tuesday that could show tighter supply and lend support to
palm oil.
"We see some defensive play ahead of the MPOB and USDA
numbers. The relief in Europe is bringing some money back to riskier
assets," said a trader with a foreign commodities brokerage in Malaysia.
By the midday break, benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange gained 0.9 percent to RM2,999($948) per tonne.
Traded volumes stood at 12,204 lots of 25 tonnes each, just slightly lower than the usual 12,500 lots.
On the technicals front, palm oil faces resistance at RM3,038 per tonne, said Reuters market analyst Wang Tao.
Malaysian
palm oil exports for the first 10 days of June fell 6.6 percent, said
cargo surveyor Intertek Testing Services, going against traders'
expectations of a stronger demand ahead of the Muslim fasting month
starting in mid-July.
"This is quite a surprise. But we still expect real demand to come in the later part in June," said a dealer based in Malaysia.
Another cargo surveyor Societe Generale de Surveillance will issue exports data later in the day.
Malaysia's
May palm oil stocks fell 4.5 percent to 1.76 million tonnes from a
revised 1.85 million tonnes, industry regulator Malaysian Palm Oil
Board said after the midday break.
The fall exceeded market
expectations that stocks in the world's No.2 palm oil producer likely
dropped 2.9 percent to 1.79 million tonnes and led to a flurry of
buying in the physical markets.
Traders will also be looking out
for the USDA supply-demand report on farm products that include
soybeans. A lower supply of soybeans to be crushed into competing
soybean oil could be supportive for palm oil.
Brent crude
futures rose above $101 a barrel on Monday as a rescue package for
Spain's banks revived hopes of steady oil demand growth, while a
failure in nuclear talks between the United Nations and Iran renewed
concern over supply disruption.
In other vegetable oil markets,
U.S. soyoil for July delivery gained 1.2 percent in Asian trade while
the most active Jan 2013 soyoil contract on the Dalian commodity
exchange also inched up 1.3 percent. - Reuters