Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday due to speculative buying amid weather concerns in major soy-growing regions of South America and gains in other commodity markets.
The benchmark April contract at Bursa Malaysia Derivatives ended 1.4% higher at 2,510 ringgit a metric ton after moving in a MYR2,474-MYR2,512 range.
CBOT March soyoil was trading 0.9% higher at 52.19 cents a pound by the end of trade on BMD.
Concerns about dry weather in major soy exporter Argentina and talk that shipping issues in Brazil will likely limit the country's ability to ship soy supplies in the near term helped fuel gains in palm oil.
Technical indicators point to further price upside Thursday, rising toward MYR2,550/ton, as traders may cover positions ahead of the long weekend, according to a trading executive in Kuala Lumpur.
"Chinese quality control officials' decision to allow several [refined] palm oil cargoes to be unloaded in the country has lifted sentiment as well," he said.
Financial markets in Malaysia will be closed Friday in observance of Federal Territory Day.
Five cargoes from Malaysia have been unloaded at various ports in China, a trader at an international trading corporation said, the first since the major vegetable oil consumer imposed stricter quality measures on refined cooking oils for food use from Jan. 1.
Concerns about the tighter rules had prompted Chinese buyers to boost palm oil imports before the measures were enforced, raising port stocks to over 1 million tons in December. Palm oil port stocks in China reached 1.13 million tons Jan. 30.
Malaysian exports of refined palm oil, refined palm olein and refined palm stearin have dwindled since the start of the year with China's new standards and its burgeoning port stocks.
Export estimates by cargo surveyor Intertek Agri Services showed palm oil shipments to China during the Jan. 1-25 period fell 24% to 253,200 tons, while another surveyor, SGS (Malaysia) Bhd., said outbound sales for the period dipped 23% to 252,250 tons.
In the cash market, refined palm olein for February was offered at $832.50/ton, while cash CPO was offered at MYR2,370/ton
Open interest on the BMD was 172,963 lots versus 177,786 lots Tuesday. One lot is equivalent to 25 tons.
A total of 24,129 lots of CPO were traded versus 30,506 lots Tuesday.
Ending BMD CPO futures prices in MYR/ton: Month Close Previous Change High Low Feb'13 2,445 2,402 +43 2,450 2,410 Mar'13 2,480 2,443 +37 2,480 2,442 Apr'13 2,510 2,475 +35 2,512 2,474 May'13 2,535 2,504 +31 2,536 2,505