Malaysian palm up on crude, slow demand caps gains

Malaysian crude palm oil futures rose marginally on Wednesday on the back of record high crude oil prices, but weakening exports limited gains.

Dealers said trading was lacklustre as the market awaited leads from an industry conference in Jakarta where top industry analysts are due to give their price forecasts.

By the midday break, the benchmark August contract on the Bursa Malaysia Derivatives Exchange rose 12 ringgit, or 0.34 percent, to 3,566 ringgit ($1,100) per tonne.

"Crude oil supplies are keeping the market steady, but everyone wants to know from this conference, what will happen to prices and demand," one dealer said.

Other traded months rose between 6 and 19 ringgit. Overall trade dropped to 2,087 lots of 25 tonnes each from around 5,000 lots that change hands during the first half on a routine day. The World Palm Oil Summit and Exhibition will run from May 21 to May 23 and will feature top traders and industry analysts such as Dorab Mistry and James Fry.

Oil hovered just above $129 on Wednesday, within striking distance of the previous session's record high as OPEC again said it would not raise supply while demand rages on and a weaker dollar supports funds buying.

The palm oil market often tracks crude oil because of growing use of vegetable oils in making biodiesel, which competes with petroleum diesel.

Exports of Malaysian palm oil products for May 1-20 rose 6 percent to 830,873 tonnes, according to cargo surveyor Intertek Testing Services, against market expectations of around 900,000 tonnes.

Another cargo surveyor, Societe Generale de Surveillance, said exports during the period fell 1.5 percent to 849,767 tonnes.

A squeeze in global vegetable oil supplies is expected to start in October as the high production cycle for palm oil slows, and prices will only rally if adverse weather comes into play, leading analyst Dorab Mistry told Reuters said on Tuesday.

In Malaysia's physical market, crude palm oil for May shipment in the southern region was quoted at 3,570/3,580 ringgit. Trades were done at 3,570 ringgit a tonne.