Malaysian crude palm oil futures rose 1.5 per cent yesterday as investors took up positions ahead of the holidays next week, but traders said the outlook for the tropical oil remained cloudy.
Prices of palm oil have fallen about 25 per cent this year, dragged down by upswings in production in top producers Malaysian and Indonesia, defaults by Asian consumers and Jakarta cutting its export taxes amid roiling financial markets.
The most-active December contract on the Bursa Malaysia Derivatives Exchange closed up RM33 at RM2,313 (US$674) per tonne.
“More traders are taking positions ahead of the holidays rather than squaring them as crude oil is generally expected to gain but domestic factors of weak exports and strong production are still a problem,”
said a trader with a local commodities broker.
Mainly Muslim Malaysia will celebrate Eid al-Fitr October 1-2 to mark the end of the Islamic fasting month of Ramadan. All financial markets will be closed on those days.
Other traded months rose between RM10 and RM60 while September 2009 and March 2010 contracts were unchanged. Overall trade stood at 10,628 lots of 25 tonnes each.
Export trends for Malaysian palm oil are dismal. Cargo surveyors have reported up to 14 per cent declines for palm shipments September 1-25, which are now less than 1 million tonnes.
Traders now expect production to rise by at least 8 per cent as plantation firms try to speed up harvesting before the Eid al-Fitr holidays.
Oil fell US$3 yesterday as concerns about financial market turmoil increased after talks between US lawmakers over a US$700 billion bailout package to mop up toxic debt stalled.
U.S soyoil for October delivery fell 0.6 per cent but the most-active January 2009 soybean oil contract on the Dalian Commodity Exchange inched up nearly 1.1 per cent.
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