VEGOILS-Palm inches higher on stronger exports, lower output

Malaysian palm oil futures closed higher Wednesday after falling in the previous session. This was due to a stronger export demand and a decrease in May output.

The benchmark palm?contract? for August delivery at the Bursa Derivatives Exchange rose 11 ringgit or 0.24% to 4,539 Ringgit ($1,116.61), as of close.

David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn. Bhd., said that the price of crude palm oil rose due to higher export estimates, and the latest Malaysian Palm Oil Board report?showing a monthly decrease in production. This is expected to support prices in the short term. Data from MPOB shows that Malaysian 'palm oil stock levels rose in May for the second month running, due to a drop in exports which outpaced a fall in production. Data from MPOB showed that cargo surveyors estimated that the exports of Malaysian palm oil products between June 1 and 10 increased by 3.5% to 4.9% compared to a month ago.

Dalian's palm oil contract, which is the most active contract in Dalian, fell by 0.13% while soyoil prices dropped 0.05%. Chicago Board of Trade soyoil prices were down by 0.01%.

Palm oil follows the 'price movements' of other edible oils, as it competes to gain a share in the global vegetable oil markets. The oil prices were stable, despite renewed U.S. Iran hostilities that muddied the direction. However, a forecast U.S. stock draw provided some'support'.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The ringgit - the palm oil's currency of trade - has weakened by 0.22% in relation to the dollar. This makes the commodity cheaper for foreign currency buyers. The Indonesian trade ministry was also flooded with questions from exporters of coal, ferro-alloys, and palm oil. They were concerned about the impact of a controversial plan to control the country's natural resource exports.

(source: Reuters)