KUALA LUMPUR, June 6: Malaysian crude palm oil futures ended up 1 per cent on Monday, with the market returning to its key psychological support of 1,400 ringgit a ton, after shadowing a rally in rival Chicago soyaoil.
But volume was light, with investors trying to get an idea of June’s supply and demand before going long, dealers said.
There’s quite a bit of concern on what production and exports for this month could be, and that’s holding the market from really performing, said a trader.
Two independent surveyors of Malaysian oil palm cargoes, Intertek Testing Services and Societe Generale de Surveillance, will release on Friday export estimates for June 1 to 10 — giving an idea of preliminary demand for the month.
The goverment-run Malaysian Palm Oil Board will also issue on Friday official production and export numbers for May, as well as opening stocks for June.
Production was estimated to have grown by a modest 3 per cent last month, against a 20 per cent growth in exports.
But investors are worried that demand could dip from June, leading to a build-up in stocks that weigh on prices.
The benchmark third-month crude palm oil on Bursa Malaysia Derivatives, August, closed up 14 ringgit, or 1 per cent, at 1,405 ringgit ($369.74) a ton. It broke the 1,400 ringgit support on June 1.
But volume on the palm oil market was thin, with just 2,541 lots of 25 tons each traded. The market typically does 6,000 lots or more on a busy day.
Constant speculation that Malaysia will revalue its ringgit — from the present fixed rate of 3.8 to the dollar — was also weighing on investors’ minds, dealers said.
A higher ringgit will make palm oil, sold in dollars, more expensive. Malaysia is the largest palm oil producer and can influence the global prices of the commodity.
In physical trade of crude palm oil on Monday, the June contract saw bids at 1,410
ringgit a ton in Malaysia’s southern region, against offers at 1,415.
In the central region, the same contract was bid/offered at 1,405/1,410 ringgit.
Trades were reported for June at 1,410 ringgit in the south and 1,400-1,405 in the central region.
The July contract saw bids/offers at 1,410/1,420 ringgit in the south and 1,405/1,415 in the central region. Trades were reported at 1,412.50 in the south. —Reuters
