Palm oil surges on demand hopes

MALAYSIAN crude palm oil futures hit fresh three-week highs yesterday as traders bet on a recovery in exports this month even as news of China buying rival soyaoil prompted some pullback.

Palm oil exports from Malaysia declined 17 per cent in August and some traders expect a rebound next month as the world's top two buyers, India and China, get ready for a string of festivals in October and November. Still news of China buying up to 40,000 tonnes of US soyaoil the previous day stirred some fears that less palm oil may be snapped up as the colder season approaches.

The benchmark November crude palm oil contract on Bursa Malaysia Derivatives Exchange rose RM27 to RM2,655 per tonne, a level unseen since August 17. It settled at RM2,650 by midday.

"The bulls don't want to be left out, if there is a recovery in palm oil exports this month. But China's increased appetite for soyaoil may take some of the excitement out of palm oil," said a Singaporean vegetable oils trader.For a first indication on exports, cargo surveyor Intertek Testing Services will unveil September 1 to 10 Malaysian palm oil exports today at 2.00pm.

One dealer in Kuala Lumpur said the Malaysian palm oil market will range between RM2,600 to RM2,650, with lacklustre trading interest ahead of a long weekend holiday. Malaysian financial markets are likely to trade half a day today, ahead of the Eid al-Fitr festival that is expected to fall tomorrow, traders said. 

Oil fell for a third straight session yesterday, with the US benchmark depressed by brimming petroleum stockpiles, as the US dollar jumped and Asian equities declined on investor attempts to reduce risk exposure.

Soyaoil for October delivery on the Chicago Board of Trade fell 0.6 per cent during Asian hours after posting gains the previous day on China ordering soyaoil cargoes. The most active May soyoil contract on China's Dalian Commodity exchange rose 0.8 per cent. -- Reuters

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