Palm hits near two week high on euro optimism

JAKARTA, May 28: Malaysian palm oil futures rose to a near two week high on Monday, as investor worries about the euro zone debt crisis eased and demand showed signs of improving ahead of the Muslim fasting month of Ramadan in July.
Asian shares and the euro edged up from lows on Monday as
opinion polls showing a lead for Greece’s pro-bailout camps helped ease risk aversion and calm fears of a disorderly exit by Athens from the single currency.
The benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange added 0.3 percent to trade at 3,139 ringgit ($1,000) per tonne.
Traded volumes stood at 7,470 lots of 25 tonnes each, compared to Friday’s total at 21,931 lots.
‘Euro zone concerns and macro fears are easing,’ said a Kuala Lumpur-based trader. ‘Demand is also a tad better.’
After peaking at 3,158 ringgit on Monday, traders said prices could peak at about 3,200 ringgit by the end of this month.
Last week, a failure by European policymakers to make any
significant breakthrough in resolving the debt crisis weighed on palm prices, sending the benchmark down to its lowest level this year at 2,993 ringgit per tonne.
Palm oil will end its current rebound around resistance at 3,192 ringgit as indicated by a Fibonacci retracement analysis and a falling channel, said Reuters market analyst Wang Tao based on technical analysis.
Also offering support to palm was crude oil, which edged above $107 per barrel on euro zone hopes and the lack of progress in talks over Iran’s nuclear programme.
The demand outlook was still uncertain however, and traders were looking for more news on Europe.
‘In the 19th century we were worried about their invasion ,’ the Kuala Lumpur trader said on Europe. ‘Today we’re worried about their economies.’
Another positive for edible oils was an upturn in demand from India and Pakistan for Ramadan, where fasting in the day is followed by feasting in the evening.
‘It is fair for the market to go higher, after being heavily oversold,’ said a Jakarta-based trader. ‘Fundamentals are still supportive – production is not really high and demand not to bad.
‘Only the macro picture was behind the recent downtrend.’
Data last week showed that palm oil exports rose slightly in May.
Investors are also keeping a close eye on weather patterns, where dry conditions in the United States could hurt the soybean crop, and a possible return of the El Nino weather pattern that may curb palm oil output in Southeast Asia.
U.S. Markets will be closed most of Monday for the U.S. Memorial Day holiday.
In other vegetable oil markets, the most active Dalian soyoil September contract rose 1.1 percent.
(agencies)

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