VEGOILS: Global weather concerns lift palm oil futures DBYU2 FCPOc3 - RTRS 09-Jul-2012 12:57
U.S. dry weather, Indian monsoon short fall stirring markets Weather woes come as Asian festival season starts in July Coming up: Malaysia exports, MPOB stocks data on July 10
By Niluksi Koswanage
KUALA LUMPUR, July 9 (Reuters) - Malaysian crude palm oil futures rose nearly one percent on Monday on worries that unfavourable weather from the United States to India could crimp oilseed production and tighten global cooking oil supply during an Asian peak demand season.
A shortfall in India's monsoon rains is the latest weather concern to hit edible oil markets as summer-sown crops such as soybeans will be affected, forcing the world's largest edible oil importer to buy more alternative palm oil. (Full Story)
Palm oil, which has lost 0.5 percent so far this year, is also now rising due to the drought in the United States, which is hurting soybean yields.
"Palm oil is taking a free ride. It will take more of the market from soybean oil especially during the festival season on the Asian side," said a trader with a foreign commodities brokerage.
By the midday break, benchmark September palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange rose 0.9 percent or 29 ringgit to 3,159 ringgit ($991) per tonne.
Traded volumes stood at 7,712 lots of 25 tonnes each, lower than the usual 12,500 lots.
Technicals, however appeared negative. Reuters analyst Wang Tao said the tropical oil will revisit a July 5 low of 3,095 ringgit, as it has completed a rebound from the June 14 low of 2,838 ringgit.
Traders are expecting a slew of Malaysian export data for the first ten days of July on Tuesday to show strong festival demand for the edible oil.
The Asian festival season starts with the Muslim observance of Ramadan, which begins around July 20, where a month of fasting in the day is followed by feasts in the evening.
The market is also on the lookout for industry regulator Malaysian Palm Oil Board's June palm oil stocks that will show a 14-month low due to strong demand chasing modest production growth.
Some analysts are on the watch for a brewing El Nino weather condition, which brings droughts to palm oil producing Southeast Asia. Malaysia-based OSK Investment Bank raised its average price assumption to palm oil to 2013 to factor in the weather anomaly.
Brent crude climbed toward $99 a barrel on Monday as failed labour talks in Norway stoked worries of a total output shutdown, while hopes China would ease monetary policy and improve fuel demand also supported prices. O/R
Other vegetable oil markets also focused on the weather in Asian trade. U.S. soyoil for July BOc1 delivery rose 1.6 percent and the most active January 2013 soyoil contract DBYF3 on the Dalian Commodity Exchange rose 0.5 percent.
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