SINGAPORE, May 17: Malaysian palm oil futures edged higher on Friday, heading for a second weekly gain, as investors pinned their hopes on a recovery in exports in the second half of May to help ease stocks.
Malaysian palm oil shipments for the first half of the month fell as much as 8 percent, cargo surveyor data showed, but the decline was smaller than the drop of nearly a fifth in the first ten days, suggesting that export demand could be recovering.
Stronger exports could eat into stocks that dipped below the psychological mark of 2 million tonnes in April, to 1.93 million tonnes, providing support for prices that have gained 0.7 percent this week.
‘It looks neutral to supportive at the moment, and I would still think it is just range-bound. The complete bull trend has not been established yet. We are still looking forward to Ramadan demand,’ said a Singapore-based trader with a global commodities house, referring to the Muslim holy month that starts early in July when communal feasting typically drives up consumption.
By the midday break, the benchmark August contract on the Bursa Malaysia Derivatives Exchange had gained 0.9 percent to 2,335 ringgit ($773) per tonne. Prices traded in a tight range between 2,327 and 2,338 ringgit.
Total traded volumes stood at 13,606 lots of 25 tonnes each, slightly higher than the usual 12,500 lots.
Technicals showed palm oil is expected to rise to 2,346 ringgit per tonne as the rebound from the May 6 low of 2,230 ringgit has been extended, said market analyst Wang Tao.
Traders are looking ahead to the first 20 days’ exports data, due on Monday, for a better indication of the demand trend. Malaysia, the world’s second largest producer, announced this week it would set its crude palm oil export tax for June at 4.5 percent, unchanged since March.
In other markets, Brent futures slipped towards $103 a barrel on Friday as disappointing U.S. Economic data revived worries over demand growth in the world’s biggest oil consumer, while a stronger dollar also pressured prices.
In vegetable oil markets, U.S. Soyoil for July delivery rose 0.6 percent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange gained 1.2 percent. (AGENCIES)
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