JAKARTA (Oct 24): Malaysian palm oil futures hit a two-week high on Friday, aided by firmer soy oil prices and with traders expecting prices to remain robust ahead of the onset of the monsoon season.
U.S. soybeans rose above $10 per bushel for the first time in six weeks, buoyed by surprisingly strong demand led by China and tight supplies after harvest delays.
"Soybean oil is quite strong and that is the main reason. Resistance is at 2,200 ringgit," said a trader with a foreign commodities brokerage.
By the close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange ended up 0.5 percent at 2,180 ringgits ($665) per tonne. Prices have not touched 2,194 ringgit highs since Oct. 10.
The benchmark has gained almost 2 percent for the week, but is down 18 percent for the year.
Total traded volume stood at 40,973 lots of 25 tonnes, slightly above the usual average of 35,000 lots.
Technicals showed palm is expected to retest resistance 2,223 ringgit, said Reuters market analyst Wang Tao.
"We are moving into a seasonal weather factor which will be supportive for palm oil," the trader added on the near-term price outlook. "The monsoon season coming in usually means palm production will go down."
The monsoon rains will start in Malaysia and Indonesia, the top two global palm producers, from early or mid-November, marked by frequent thunderstorms and flooding, which can delay harvesting and complicate transportation of palm fruit to mills as roads become inundated.
On the data front, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance are due to release data on Malaysia's Oct. 1-25 palm oil exports on Monday.
Market players will be looking for signs of weaker production of crude palm oil to prevent another rise in inventories. Palm oil stocks in No.2 producer Malaysia swelled to an 18-month high of 2.09 million tonnes at end-September.
In competing vegetable oils, the U.S. soyoil contract for December was unchanged in late Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange climbed 0.4 percent.
"The market gained a little bit of ground over the last few days, but has started to run out of steam with some profit-taking," a second trader with the foreign commodities brokerage said.
"Where palm goes next depends on energy markets -- all the pressure is coming form the energy or soy side," adding that he expected palm to remain firm as demand rises and output falls.
Brent crude oil fell to $86 a barrel after a confirmed case of Ebola in New York raised fears of travel restrictions that could trim jet fuel demand, and poor economic growth expectations weighed on projected oil consumption.
Weaker crude prices make palm oil a less attractive blending option for biodiesel feedstock. Palm, soy and crude oil prices at 1043 GMT Contract Month Last Change Low High Volume MY PALM OIL NOV4 2199 +14.00 2192 2211 553 MY PALM OIL DEC4 2187 +10.00 2177 2199 8180 MY PALM OIL JAN5 2180 +11.00 2172 2194 21234 CHINA PALM OLEIN JAN5 5178 +12.00 5168 5206 449324 CHINA SOYOIL JAN5 5810 +20.00 5800 5880 373546 CBOT SOY OIL DEC4 32.74 +0.00 32.50 32.79 6105 INDIA PALM OIL OCT4 0.00 +0.00 0.00 0.00 0 NYMEX CRUDE DEC4 81.35 -0.74 81.20 81.95 24194 Palm oil prices in Malaysian ringgit per tonne CBOT soy oil in U.S. cents per pound Dalian soy oil and RBD palm olein in Chinese yuan per tonne India soy oil in Indian rupee per 10 kg Crude in U.S. dollars per barrel
($1 = 3.2770 Malaysian ringgit) ($1 = 6.1168 Chinese yuan) ($1 = 61.1600 Indian rupee)