Palm prices touch 1-year high

AKARTA: Malaysian palm oil futures briefly rose to a fresh one-year high on Friday, as strong Asian demand coupled with lower production expectations supported prices.

Both Malaysia and Indonesia, which account for the lion's share of global palm oil production, are entering their monsoon weather season, traders and analysts say, with output also likely to be dented by a lower production cycle as yields have eased from last year.

By mid-day, the benchmark January contract on the Bursa Malaysia Derivatives Exchange traded 0.2 per cent higher at RM2,599 per tonne.

Earlier, benchmark prices rose to RM2,603, its highest level since October 25, 2012, and have gained about seven per cent for the year to date.

"The market is holding very well," said a trader with a foreign commodities brokerage in Kuala Lumpur. "We are not going to have high production, due to wet weather conditions.

"The market still looks friendly so there is room to go higher," he said, adding that both Chinese and Indian demand remained strong. "If the market comes down, it will likely be due to profit taking."

Total traded volume stood at 16,574 lots of 25 tonnes each, above the usual 12,500 lots.

Technicals showed Malaysian palm oil's bullish target of RM2,630 per tonne remains unchanged, based on its wave pattern and a Fibonacci projection analysis, said Reuters market analyst Wang Tao.

"Demand should remain fairly stable in view of the upcoming festive events like Chinese New Year and rising biodiesel mandates in Indonesia," CIMB Analyst Ivy Ng said in a note.

"The improvement in CPO (crude palm oil) price could be sustained into early-2014."

In other markets, Brent futures rose above US$109 a barrel on expectations of steady demand growth as the manufacturing sector in China, the world's second-biggest oil consumer, expanded at its fastest pace in 18 months.

In competing vegetable oil markets, the US soyoil contract for December rose 0.4 per cent in early Asian trade. The most-active May soybean oil contract on the Dalian Commodities Exchange gained slightly