Malaysian palm oil futures hit 1-1/2-month highs on Tuesday as optimism grew that a demand recovery and stagnant output would pare stocks of the edible oil. Palm oil exports from the country during May 1-25 fell 2.6 percent from a month ago but that was an improvement from the 6.6 percent decline in the first 20 days, said cargo surveyor Societe Generale de Surveillance on Monday.
Another surveyor, Intertek Testing Services, reported a 5.2 percent fall in the first 25 days, also recovering from an earlier 9.4 percent decline. Purchases of palm oil may rise further as buyers stock up ahead of the Muslim fasting month of Ramazan, which starts in July this year. “Traders are talking about Ramazan demand and slowing production … these factors are giving strength to the market. We will have to see how long this rally will hold,” said a trader with a local commodities brokerage in Kuala Lumpur.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange inched up 0.3 percent to close at 2,388 ($7864) ringgit per tonne, after earlier rising as high as 2,401 ringgit, a level last seen on April 10. Total traded volumes were thin, at 18,233 lots of 25 tonnes each, compared to the average 35,000 lots.
Technicals showed palm oil faces resistance at 2,388 ringgit per tonne, and may seek support at 2,362 ringgit before rising again, said Reuters market analyst Wang Tao. Recovering demand, coupled with stagnant output, may ease stocks further in the world’s second-largest palm oil producer, whose inventory level slid to a 10-month low of 1.93 million tonnes in end-April. In vegetable oil markets, US soyaoil for July delivery gained 0.7 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange fell 0.1 percent.