Crude palm oil futures on Malaysia's derivatives exchange edged up Friday, as optimism over a recovery in export demand lent support.
The benchmark April contract on Bursa Malaysia Derivatives ended 0.4% higher at 2,560 ringgits a metric ton after moving in a choppy MYR2,532-MYR2,562 range.
Palm oil prices were mostly higher the past few sessions due to optimism that export demand could go up for the tropical oil used in a wide variety of consumer products ranging from biscuits to chocolates and cooking oil.
The vegetable oil's wide price discount to rival soyoil has encouraged "some substitution from expensive soy," a broker in Singapore said.
Unfavorable weather in major soybean growing regions of South America raised concerns about the soy crop and lifted prices, widening its differential to palm oil. Palm oil is currently offered $300-336/ton cheaper to soyoil, physical market data showed.
Market participants will be looking forward to January crop data by industry regulator, the Malaysian Palm Oil Board, due Feb. 13. Stockpiles are tipped to ease a tad from December's all-time high of 2.63 million tons, as export demand has recovered.
Export estimates for the first 10 days of February by cargo surveyors are also scheduled to be released Feb. 13.
Inventories likely reached 2.60 million tons, a modest 1.1% drop from a month earlier, while overall palm oil output probably fell 15% to 1.51 million tons, in line with seasonally lower yields and as heavy rain slowed harvesting activities.
Asian traders expect limited movements in palm oil next week, as major palm oil consumer China will be closed the whole week for Lunar New Year holidays.
In the cash market, refined palm olein for February shipment was offered at $855/ton and cash CPO for prompt shipment at MYR2440/ton.
Open interest on the BMD was 177,268 lots, versus 178,596 lots Thursday. One lot is equivalent to 25 tons.
A total of 18,142 lots of CPO were traded versus 30,443 lots Thursday.
Ending BMD CPO futures prices in MYR/ton: Month Close Previous Change High Low Feb'13 2,480 2,470 +10 2,468 2,468 Mar'13 2,534 2,524 +10 2,537 2,509 Apr'13 2,560 2,551 +9 2,562 2,532 May'13 2,579 2,568 +11 2,580 2,551