KUALA LUMPUR, May 16: Malaysian palm oil futures extended gains at the close on Thursday due to technical covering and talk of improving demand and falling stocks in the coming months.

The new benchmark third-month August futures was 17 ringgit higher at 1,260 ringgit ($331.58) a ton after trading as high as 1,263 ringgit. Volume was heavy at 2,610 lots, up from Wednesday’s 1,260 lots.

Analysts and traders said the market was technically friendly and could touch the 1,273 ringgit key resistance level soon.

Private crop forecaster Ivan Wong has estimated end-May palm oil stocks at 925,000-935,000 tons, down from the official 1.06 million tons in April. He put end-June stocks at 835,000-845,000 tons and those at the end of July at 800,000-810,000 tons.

Production is not that great. As you can see from Wong’s prediction, we will be consuming almost 150,000 tonnes from the stocks in the next three months, said one trader.

Some traders said India, the world’s largest edible oil importer, was expected to purchase 500,000 tons of palm oil from Malaysia and another 300,000 tons from Indonesia in May-June because of low stocks and the late arrivals of soyaoil.

India’s current edible oil stocks were estimated at 200,000 tons, while monthly consumption reached around 900,000-950,000 tons.

Around 150,000 tons of South American soyaoil was earlier scheduled to arrive in India early next month, but traders said the oil was likely to arrive in late June.

Traders said Pakistan, also a main buyer, was expected to buy around 120,000-150,000 tons of palm oil in May because of the dwindling stocks — seen at around 50,000 tons, down from 80,000-100,000 tons a month.

In physical palm oil, players said they were monitoring the crop in Indonesia, which is entering a seasonal decline, and the strengthening of the currency rupiah.

We have so much interest in the rupiah these days because Indonesian exporters will be less aggressive when the currency is strengthening, said one trader.

The May contract for the southern and central regions saw bids at 1,260 ringgit a ton, against sale offers at 1,265 ringgit. Trade was reported at 1,255 to 1,260 ringgit for both sides.

June contract for the southern and central regions was offered at 1,270 ringgit against bids of 1,260. Deals were done at 1,260 ringgit for both sides.—Reuters