KUALA LUMPUR, May 9: Malaysian crude palm oil futures rose 1.1 per cent on Friday on record crude oil prices and renewed fears of a tightness in vegetable oil stocks, but gains were capped by concerns palm oil demand may weaken.
High oil prices and fresh protests by Argentine soy farmers suggest there will additional demand for palm oil in the food and fuel sectors, but traders said this has not yet translated into new orders for palm cargoes.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange settled up 38 ringgit to 3,495 ringgit ($1,094).
External factors like Argentine strike, US soyaoil and record crude prices are bullish but at the back of every trader’s mind is the question of why demand for palm oil hasn’t suddenly surged, said a trader with a foreign commodities broker.
Traders widely expect the export data to be dismal.
Still, the market found some support from news that Pakistan will import up to 40 per cent more palm oil in July-September period for the Muslim religious festival of Ramazan, which falls in September.
Thousands of farmers lined Argentina’s highways on Thursdayin fresh protests to disrupt key grains exports and pressure the government to cut agricultural taxes.
U.S. crude oil futures hit a record high of $125 per barrel on Friday as a surge in heating oil futures triggered active buying by investment funds. Malaysia’s April palm oil reserves are likely to have fallen
2.2 per cent from March to the lowest level in four months, but the pace of the fall more than halved as output grew faster than demand, a Reuters poll showed on Friday.
In Malaysia’s physical market, crude palm oil for May shipment in the southern region was quoted at 3,495/3,500 ringgit. Trades were done between 3,460 and 3,495 ringgit.—Reuters
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