Malaysian palm hits two-week high on soy oils, monsoon outlook

FE Team | Published: October 25, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

JAKARTA, Oct 24 (Reuters): Malaysian palm oil futures hit a two-week high on Friday, aided by firmer soy oil prices and with traders expecting prices to remain robust ahead of the onset of the monsoon season.
US soybeans rose above $10 per bushel for the first time in six weeks, buoyed by surprisingly strong demand led by China and tight supplies after harvest delays.
"Soybean oil is quite strong and that is the main reason. Resistance is at 2,200 ringgit," said a trader with a foreign commodities brokerage.
By the close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange ended up 0.5 per cent at 2,180 ringgits ($665) per tonne. Prices have not touched 2,194 ringgit highs since Oct. 10.
The benchmark has gained almost 2 per cent for the week, but is down 18 per cent for the year.
Total traded volume stood at 40,973 lots of 25 tonnes, slightly above the usual average of 35,000 lots.
Technicals showed palm is expected to retest resistance 2,223 ringgit, said Reuters market analyst Wang Tao.
"We are moving into a seasonal weather factor which will be supportive for palm oil," the trader added on the near-term price outlook. "The monsoon season coming in usually means palm production will go down."
The monsoon rains will start in Malaysia and Indonesia, the top two global palm producers, from early or mid-November, marked by frequent thunderstorms and flooding, which can delay harvesting and complicate transportation of palm fruit to mills as roads become inundated.
On the data front, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance are due to release data on Malaysia's Oct. 1-25 palm oil exports on Monday.
Market players will be looking for signs of weaker production of crude palm oil to prevent another rise in inventories. Palm oil stocks in No.2 producer Malaysia swelled to an 18-month high of 2.09 million tonnes at end-September.
In competing vegetable oils, the U.S. soyoil contract for December was unchanged in late Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange climbed 0.4 per cent.
"The market gained a little bit of ground over the last few days, but has started to run out of steam with some profit-taking," a second trader with the foreign commodities brokerage said.
"Where palm goes next depends on energy markets -- all the pressure is coming form the energy or soy side," adding that he expected palm to remain firm as demand rises and output falls.