MALAYSIAN
crude palm oil futures hit 33-month highs yesterday as hopes of
strong China demand and erratic weather helped shrug off Beijing’s
surprise interest rate hike.
China soyoil recovered some
losses, after dropping earlier in the day, on expectations that the
government would restock food staples next year and prospects of
stronger demand ahead of the Lunar New Year.
Traders said the
main driver for palm oil futures include heavy rains hurting yields and
disrupting harvesting in Malaysia and Indonesia as well as a dry spell
potentially cutting into South American soybean production.
“We are still in a weather market. Exports are down for palm oil and
China’s interest rate hike may limit the gains but no one can deny that
China’s economy and demand will expand next year,” said a trader with a
foreign brokerage in Malaysia.
“In fact, monetary tightening indicates a strong economy and demand cannot just die overnight if there is a hike.”
Benchmark
March 2011 palm oil on the Bursa Malaysia Derivatives Exchange rose as
much as 2.8 per cent to RM3,767 (US$1,217) per tonne, the highest since
March 14, 2008 and confirming an earlier Reuters technical analysis.
The contract settled at RM3,756. Traded volume almost doubled at 18,543 lots of 25 tonnes each.
Palm oil will rise to RM3,766 per tonne as an upward wave “3” is advancing, Reuters technical analysis showed.
Malaysian
palm oil exports for December 1-25 fell 23.9 per cent from the same
period a month ago, said cargo surveyor Intertek Testing Service, on
slower imports from India and China.
But some traders expect China to buy aggressively next year ahead of Lunar New year in early February.
Another
cargo surveyor Societe Generale de Surveillance reported a 23.7 per
cent drop for palm oil exports over the same period.
Source : Business Times
