Crude palm oil futures on Malaysia’s derivatives exchange rose to a one-month high Monday, propelled by short covering amid concerns that dry weather in major soybean growing areas in South America could further damage yields and boost demand for rival vegoils.
The benchmark April contract on the Bursa Malaysia Derivatives exchange ended 1.2% higher at MYR3,205 a metric ton, the highest since Jan. 12.
There is greater risk of supplies falling "as oilseeds struggle to find additional acreage during the upcoming North American planting window, which will increase the shift of end-user demand to palm oil," Rabobank analysts said in a note.
The bank expects palm oil prices to remain elevated in coming months, as low production in many soy- and rapeseed-growing areas in China and India may result in both countries relying more on palm oil for domestic needs.
"Weather problems in South America aren't going away, so that will continue to support vegoil prices. The issue now, though, is whether Malaysian export figures will reflect that trend when buyers stock up," an executive at a palm oil firm in Malaysia said.
Export demand for Malaysian products has been waning since late last year due to buyers' preference for cheaper Indonesian oils after an export tax revamp in October.
In the cash market, refined palm olein for February/March shipment was offered at $1,085/ton while cash CPO for prompt shipment was offered MYR20 higher at MYR3,140/ton.
Open interest on the BMD was 122,792 lots, versus 118,596 lots Monday. One lot is equivalent to 25 tons.
A total of 25,490 lots of CPO were traded versus 22,750 lots Monday.
Closing BMD Crude Palm Oil (CPO) futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Feb'12 3,160 3,130 +30 3,160 3,140 Mar'12 3,190 3,160 +30 3,190 3,158 Apr'12 3,205 3,168 +37 3,205 3,155 May'12 3,206 3,167 +39 3,206 3,160
-By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
February 14, 2012 06:13 ET (11:13 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.
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