Crude palm oil futures on Malaysia's derivatives exchange nudged higher Thursday, with investors hopeful that improving export demand in coming months will further ease ample stockpiles in Southeast Asia.
The benchmark April contract at Bursa Malaysia Derivatives ended 0.2% higher at 2,551 ringgits a metric ton after moving in a MYR2,530-MYR2,567 range.
Recovering industrial demand in major consumers China, Europe and India and rising use in biodiesel should result in overall demand expanding significantly this year, HSBC analyst Thilan Wickramasinghe said.
"Against a backdrop of increased demand, global edible oil balances should be well below historical levels, despite improved production. Palm oil is the exception," Mr. Wickramasinghe said, noting that it will "receive more than its fair share of demand" given its wide price discount of over $300/ton to soyoil.
He tips average palm oil prices for 2013 at $957/ton. The estimate represents a 16% jump from current prices.
Expectations for a drop in stockpiles in Malaysia due to lower production in January also supported, a trading executive in Jakarta said.
Analysts and trade participants said end-January stocks likely reached 2.60 million tons, a modest 1.1% drop from a month earlier.
The Jakarta-based executive cautioned that activity could remain choppy Friday as investors unwind positions before the Lunar New Year holidays and January crop data due Wednesday from the Malaysian Palm Oil Board, the industry regulator.
Open interest on the BMD was 178,596 lots, versus 174,578 lots Wednesday. One lot is equivalent to 25 tons.
A total of 30,443 lots of CPO were traded versus 29,055 lots Wednesday.
Ending BMD CPO futures prices in MYR/ton: Month Close Previous Change High Low Feb'13 2,470 2,469 +1 2,490 2,470 Mar'13 2,524 2,524 Unchanged 2,540 2,508 Apr'13 2,551 2,547 +4 2,567 2,530 May'13 2,568 2,565 +3 2,584 2,550