RTRS:VEGOILS-Palm oil hits nearly 2-week high ahead of year-end
* Year-end book squaring; positive China demand outlook
* Euro zone debt issues remain, but risk levels ease
* South American SE Asia weather pattern a focus
(Recasts, adds comment/detail)
By Michael Taylor
JAKARTA, Dec 21 (Reuters) - Malaysian crude palm oil
futures rose to its highest in nearly two weeks on Wednesday on
expectations of rising demand, firmer comparative oils and an
improving euro zone debt outlook.
European stocks rallied and the euro was well bid as
investors priced in an improvement in the economic outlook and
looked forward to a big take up by banks of the European Central
Bank's first-ever offer of three-year loans.
Benchmark March palm oil futures <0#FCPO:> on the Bursa
Malaysia Derivatives Exchange touched a high at 3,072 Malaysian
ringgit per tonne, a level last seen on Dec. 9.
"The market is moving to the year-end slightly firmer," said
a Kuala Lumpur-based trader. "Monday is a holiday next week, so
a lot of people are closing positions."
"Crude is higher and other markets are stabilizing," he
added. "The sovereign debt issue is going to be a trading issue
into next year."
Malaysian financials markets will close on Monday for
Christmas.
Traded volumes for the March palm contract were at 13,242
lots of 25 tonnes each, compared with 9,098 lots on Tuesday.
Palm oil is on course for a 19 percent fall this year,
however, weighed down in part by doubts surrounding the euro
zone debt crisis and global economic uncertainty.
"Prices will be around 3,100 ringgit," said a Jakarta-based
analyst when asked about prices towards the year-end.
"There will be speculation trades on next year, with strong
demand ahead of next year ... ahead of the Chinese new year."
Data from the previous session showed that exports from
Malaysia are falling as top buyers slow orders before the year
end, giving some breathing space to palm oil stocks that have
started to tighten a little.
Palm oil traders also kept an eye out for weather
developments in South America curbing the soy crop that is
crushed into competing soyoil.
U.S. corn fell, snapping three sessions of gains, while
soybeans were little changed near a 4-week top on forecasts of
rain in parts of Brazil and Argentina that had been hit by dry
weather.
U.S. soyoil for January delivery inched higher in
Asian trade, while the most active September 2012 soyoil
contract on China's Dalian commodity exchange also
gained.
"There is no clear direction in the soybean market right now
but it may be preparing for a strong rebound in the new year,"
said Zhan Zhi Hong, an oil analyst with Shenzhen-based China
Merchants Futures.
"Fundamentally, the weather conditions in South America will
not affect the market for too long."
The monsoon season in top Southeast Asian palm oil producing
countries has offered some support in recent weeks, with
expectations of lower output.
"There is talk that production in December may decline by
about 20 percent, coupled with a positive external market
leading the rebound," said a second Kuala Lumpur-based trader.
In other oil markets, Brent crude futures rose above $107,
gaining for a third straight day, after upbeat U.S. data pointed
to a recovery in demand growth in the world's biggest oil
consumer amid fears of a disruption in supplies.
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1 = 3.1784 Malaysian ringgit)
(Additional reporting by Chew Yee Kiat in Singapore; Editing by
Himani Sarkar)
