Palm oil at highest in more than eight years

Palm oil at highest in more than eight years
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First Published: Fri, Apr 13 2007. 10 39 PM IST
Updated: Fri, Apr 13 2007. 10 39 PM IST
Singapore: Malaysian palm oil futures rose to their highest in more than eight years amid concern that supply may lag demand for the commodity used in cooking and as biofuel.
Stockpiles in Malaysia, the largest producer in 2006, fell to a 19-month low in March, according to data from the country’s palm oil board on 10 April. Futures for June delivery gained 4.7% in four days before dropping 0.6% on Thursday.
“People in general are just growing more bullish on the palm oil prices,” Niklas Olausson, analyst at CLSA Asia Pacific Markets, said from Kuala Lumpur. “Day to day it’s anyone’s guess, but this is a bullish market and it can be quite volatile.” June delivery palm oil, the most active contract on the Malaysia derivatives exchange, closed at 2,219 ringgit ($645/Rs27,735) a tonne, up 2%, the highest since 6 January, 1998.
“All it takes is one buyer to start getting worried about supply and demand outlook and prices can spike up that way on a day to day basis,” Olausson said.
Prices have also been supported in the afternoon by some investors who try to “rollover” their positions on the nearby April contract which is trading for the last day on Friday, before expiry, said Steven Lau, trader at Itochu Singapore Pte Ltd.
Rollover refers to investors taking money from a maturing futures contract and investing it in a longer-term contract.
Malaysia’s output gained 1.2% to 3.19mt in the first three months, while local demand more than doubled in the quarter, reducing exports by 8.7%, according to the Malaysian palm oil board. Malaysia and Indonesia produce 85% of the world’s palm oil.
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First Published: Fri, Apr 13 2007. 10 39 PM IST
More Topics: Money Matters | Commodities |