SINGAPORE, June 3: Malaysian palm oil futures edged up on Monday, as traders continued to bet on stagnant production to ease stocks further, although gains were limited by weak data from major consumer China.
The HSBC/Markit Purchasing Managers’ Index (PMI) for China fell to 49.2 in May, shrinking for the first time in seven months and reflecting softer domestic and external demand in the world’s second largest buyer of the edible oil.
But investors remain optimistic that Malaysia’s palm oil stocks will inch lower on weak production and a demand recovery ahead of the Muslim fasting month of Ramadan that starts in July, when communal feasting typically drives up consumption.
‘External markets are not doing so well, the sentiment on global economy remains weak,’ said a trader with a foreign commodities brokerage in Kuala Lumpur.
‘But on the palm side we still see some supportive factors. There may be a supply squeeze as output typically picks up in April or May but we are not seeing that this year.’
By the midday break, the benchmark August contract on the Bursa Malaysia Derivatives Exchange inched up 0.3 percent to 2,403 ($779) ringgit per tonne, after trading in a tight range between 2,402 and 2,411 ringgit.
Total traded volumes were thin, at 9,540 lots of 25 tonnes each, compared to the usual 12,500 lots.
Technicals showed palm oil is expected to break a resistance at 2,419 ringgit per tonne and rise further towards 2,446 ringgit, said Reuters market analyst Wang Tao.
Exports of Malaysian palm oil products fell over 3 percent in May compared to a month ago, cargo surveyor data showed, as shipments to Europe and China slowed. Demand from India and Pakistan, however, rose as buyers stocked up ahead of Ramadan.
In other markets, Brent futures slipped below $100 a barrel for the first time in a month on demand growth concerns after factory activity data from China pointed to momentum slowing in the world’s second-biggest oil consumer.
In vegetable oil markets, U.S. Soyoil for July delivery gained 0.4 percent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange edged up 0.3 percent.
(AGENCIES)
Follow our WhatsApp channel