Palm oil price surges above RM4,000
Saturday, March 1, 2008
MALAYSIAN palm oil surged above RM4,000 a tonne for the first time yesterday as crude oil's surge to a record and buoyant export demand triggered a fresh wave of buying by funds and speculators.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange rose as much as RM151, or 4.2 per cent, to RM4,013, as traders fretted about a surge in demand from India and China following damage to their domestic crops.
"The bull is back after a day of inactivity," said a trader with a local commodities broker.
Palm oil, used in goods ranging from biscuits and lipstick to biofuels, has risen 31 per cent this year on a heady cocktail of strong Asian demand, increased Indonesian export duties and tightness in global soy oil supplies.
This week, some bullish forecasts by leading industry analysts have helped prices to hold up, despite traders fearing that the market may be overbought and a correction due soon.
Dorab Mistry, a director of India's Godrej International Ltd and considered the leading authority on the market, said he expected prices to rise above RM4,000 soon and climb to RM4,500 between September this year and February next year. But his peers were more downbeat on the outlook, citing the uncompetitiveness of biofuels as petroleum crude oil prices lag the vegetable oil rally.
"Bulls in the form of crude oil are underpinning the vegetable oil rally," said a trader with a local brokerage.
Another trader with a foreign brokerage added: "These analysts had valid points about the potential for palm oil prices to ease but any increase in crude oil and exports or even a supply issue brings a tsunami of funds and buying interest. Any rise will be exaggerated."
Reuters
The benchmark May contract on the Bursa Malaysia Derivatives Exchange rose as much as RM151, or 4.2 per cent, to RM4,013, as traders fretted about a surge in demand from India and China following damage to their domestic crops.
"The bull is back after a day of inactivity," said a trader with a local commodities broker.
Palm oil, used in goods ranging from biscuits and lipstick to biofuels, has risen 31 per cent this year on a heady cocktail of strong Asian demand, increased Indonesian export duties and tightness in global soy oil supplies.
This week, some bullish forecasts by leading industry analysts have helped prices to hold up, despite traders fearing that the market may be overbought and a correction due soon.
Dorab Mistry, a director of India's Godrej International Ltd and considered the leading authority on the market, said he expected prices to rise above RM4,000 soon and climb to RM4,500 between September this year and February next year. But his peers were more downbeat on the outlook, citing the uncompetitiveness of biofuels as petroleum crude oil prices lag the vegetable oil rally.
"Bulls in the form of crude oil are underpinning the vegetable oil rally," said a trader with a local brokerage.
Another trader with a foreign brokerage added: "These analysts had valid points about the potential for palm oil prices to ease but any increase in crude oil and exports or even a supply issue brings a tsunami of funds and buying interest. Any rise will be exaggerated."
Reuters
Business Besides Oil
