Palm oil hits 6-week high on wet weather outlook
Wednesday, 4 January 2012
JAKARTA, Jan 3 (Reuters): Malaysian crude palm oil futures rose to a six-week high on Tuesday, buoyed by strong crude prices and expectations of lower output in Southeast Asian producers due to wet weather.
Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange traded 1.7 per cent higher at 3,228 Malaysian ringgit ($1,000) per tonne. Prices earlier touched 3,231 ringgit, the highest level since November 21.
"Weather vagaries," said a Kuala Lumpur-based trader. "Grains are leading on South American hot and dry weather plus crude oil."
"January to March are also seasonal months for lower output and big funds are backing the bullish trend," he added. Traded volumes for the March palm contract were at 6,011 lots of 25 tonnes each, compared with 7,766 on the last trading session on December 30.
Indonesia and Malaysia, the world's top two producers of palm, are currently in their monsoon season. Traders say this could impact output and prices during the first quarter.
The Malaysian Meteorological Department sees heavy rains in Pahang and Sabah over the coming weekend, which may trigger some floods in these regions that account for about 40-50 per cent of national production.
A second Kuala Lumpur-based trader saw prices at
3,100-3350/3400 ringgit in the first half. "Stocks should begin to decline (and) production is likely to only pick up from February or March onwards."
In related oil markets, Brent crude rose to above $108 a barrel as China's manufacturing activity expanded slightly, lifting hopes of higher oil demand, and as rising tensions between Iran and the West created supply disruption fears.s
Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange traded 1.7 per cent higher at 3,228 Malaysian ringgit ($1,000) per tonne. Prices earlier touched 3,231 ringgit, the highest level since November 21.
"Weather vagaries," said a Kuala Lumpur-based trader. "Grains are leading on South American hot and dry weather plus crude oil."
"January to March are also seasonal months for lower output and big funds are backing the bullish trend," he added. Traded volumes for the March palm contract were at 6,011 lots of 25 tonnes each, compared with 7,766 on the last trading session on December 30.
Indonesia and Malaysia, the world's top two producers of palm, are currently in their monsoon season. Traders say this could impact output and prices during the first quarter.
The Malaysian Meteorological Department sees heavy rains in Pahang and Sabah over the coming weekend, which may trigger some floods in these regions that account for about 40-50 per cent of national production.
A second Kuala Lumpur-based trader saw prices at
3,100-3350/3400 ringgit in the first half. "Stocks should begin to decline (and) production is likely to only pick up from February or March onwards."
In related oil markets, Brent crude rose to above $108 a barrel as China's manufacturing activity expanded slightly, lifting hopes of higher oil demand, and as rising tensions between Iran and the West created supply disruption fears.s