Malaysian palm oil futures rallied to end at a 17-month high on Thursday, following a recovery in China and US soy markets, while unfavourable crop weather in Southeast Asia continued to underpin prices. The US soyaoil contract for May rose 0.4 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange gained 0.6 percent. Higher prices of soyaoil could prevent buyers from switching to the rival vegetable oil.
"The whole scenario changed after the midday break on the back of the recovery of the Dalian and the US soybean oil," a trader with a foreign commodities brokerage said. "There was huge buying interest which came in after 5.00 pm. Those who held on to a selling-position earlier had to trim their positions," the Kuala Lumpur-based trader said. The benchmark May contract on the Bursa Malaysia Derivatives Exchange climbed to 2,869 ringgit per tonne in late Thursday trade, hitting its highest since September 2012. Prices then moved to close at 2,863 ringgit ($878), a 1.2 percent increase from the previous session.
The Malaysian palm oil markets which set the tone for global prices, are on track for a fifth straight week of gains. Total traded volume stood at 33,033 lots of 25 tonnes, slightly below the average 35,000 lots. Technicals show that Malaysian palm oil prices could peak around a resistance at 2,883 ringgit per tonne, Reuters market analyst Wang Tao said. Malaysian palm oil stocks likely dropped to a five-month low of 1.79 million tonnes in February as dry weather hurt output, a Reuters poll showed, but lacklustre demand towards the end of the month curbed the fall in inventories.
