Crude palm oil futures hit 38-week intraday high

Malaysian crude palm oil futures hit a 38-week intraday high yesterday, tracking soya which soared on fears of tight global vegetable oil supplies, but gave up some gains in late selling, traders said.

“I think the main driver was soya prices. Our own (palm) fundamentals are a non-factor today. But prices moved too fast so people were tempted to take profits,” said a trader at a Kuala Lumpur-based commodities brokerage.

The benchmark July contract rose RM107, or 4.1 per cent, to RM2,702 per tonne, after going as high as RM2,798, the strongest intraday level since August 8 last year.

Other traded months rose between RM104 and RM203. Overall volume more than tripled the usual at 36,748 lots of 25 tonnes each.

Traders said fears over tightness in global vegetable oils have sent soya bean prices to a seven-month high and spurred heavy buying in palm oil futures. News about a reduction in the soya crop in Argentina, the world’s third biggest exporter, heightened fears.

Argentina’s 2008/09 soya harvest is seen dropping to 34 million tonnes from a previous estimate of 36.2 million, due to poor yields, the Buenos Aires Grains Exchange said last Wednesday.

“That is a very big reduction and we were actually not ready for that kind of reduction,” another trader said.

US soyaoil for May shipment rose 2.0 per cent in Asian trade and the most-active September soyaoil contract on Dalian’s Commodity Exchange surged 4.98 per cent.

The price of tropical oil - used in products ranging from soap to biodiesel - has gained 59 per cent this year, mainly driven by fears of falling palm stocks in the world’s number 2 producer.

In the physical market, palm oil for May delivery was sold between RM2,850-RM2,880 per tonne in the southern and central regions.