Malaysia palm up as rising crude oil supports vegoils

Malaysian crude palm oil futures rose 0.9 percent on Monday, extending four days of gains as vegoils markets firmed amid crude oil's move towards record levels, traders said.

Although traders were betting on analyst's forecasts last week that palm will restart its rally on record crude prices, the market was weighed by weaker export numbers by a cargo surveyor.

Palm oil, used in products from bio-fuels to ice-cream, is roughly 17.8 percent off record highs of 4,486 ringgit in March but has gained nearly 21 percent so far this year.

By the midday break, the benchmark August contract on the Bursa Malaysia Derivatives Exchange rose 32 ringgit to 3,686 ringgit ($1,144) per tonne, after going as high as 3,705 ringgit.

"The overall shortage in commodities worldwide and strong crude oil prices have worked favourably for palm oil. Crude oil is now seen to wield a stronger influence over palm oil through soy oil," said a trader with a foreign commodities broker.

"Exports might seem disappointing but it has more or less held on to levels a month before."

Other traded months rose between 47 and 77 ringgit. Traded volumes stood at 3,730 lots of 25 tonnes each, easing a little from the usual 5,000 lots.

Malaysian crude palm oil prices may resume their rally if record crude oil prices boost demand for alternative fuels, soaking up high stocks, leading industry analysts said on Friday.

Top analysts Dorab Mistry and James Fry noted record crude oil's growing influence on vegetable oils like palm, thanks to the increasing bio-diesel incentives and mandates in Europe and the Americas, and to some extent Asia. Oil rose towards $133 a barrel on Monday, extending the previous session's gains on a supply outage at the Statfjord oilfield in the North Sea and a weak US dollar.

Soy oil for July delivery at the Chicago Board of Trade was unchanged in Asian trade after ending 1.73 cents higher at 63.56 cents per lb last week, when Argentine farmers and government officials failed to resolve their conflict over a soy export tax.

The most active September contract on China's Dalian Commodity Exchange rose 1.05 percent.

Indonesia's move late Friday to keep its palm oil export tax in June unchanged had little bearing on the market as the move was anticipated, traders said.

Exports of Malaysian palm oil products for May 1-25 fell 2.36 percent to 993,093 tonnes from 1,017,134 tonnes shipped between April 1 and 25, cargo surveyor Intertek Testing Services said on Monday.

Another cargo surveyor, Societe Generale de Surveillance, is due to release its estimates later on Monday.

In Malaysia's physical market, crude palm oil for May and June shipment in the southern region was quoted at 3,690/3,700 ringgit. Trades were done between 3,690 and 3,700 ringgit a tonne.