Malaysian palm oil futures rose 0.3 percent on Thursday as traders await signs of Asian and Middle Eastern countries stockpiling ahead of the Muslim holy month of Ramadan in August.
Countries from Bangladesh to Egypt will start buying more at least two months ahead for Ramadan where fasting in the day is followed by elaborate feasts and dinner gatherings at night.
Stronger demand could help palm oil eventually claw back a loss of 11 percent notched so far this year as production in Malaysia and Indonesia stages a strong rebound after two years of weak yields, traders said.
By midday, the benchmark August crude palm oil contract on the Bursa Malaysia Derivatives Exchange rose 10 ringgit to 3,370 ringgit ($1,119) a tonne. On Monday, the contract hit a more than two-month high.
Overall traded volume stood at 11,180 lots of 25 tonnes each from the usual 12,000 lots. "I was hoping for a decline in prices to lure in these buyers. It would have started earlier, although the strong export data in May and firm external markets have kept prices up," said a trader with a foreign commodities brokerage in Kuala Lumpur.
There are some signs of Ramadan demand, traders said. May exports rose above 1.35 million tonnes, driven partly by strong demand from India with a sizable Muslim population and mostly-Muslim Pakistan.
They will likely be drawn in sooner or later as Malaysian palm oil stocks probably rose to 1.7 million-1.8 million tonnes last month as favourable weather aids output.
Technicals were negative. Palm oil would extend its loss to 3,307 ringgit per tonne as indicated by a Fibonacci retracement analysis.
Strategy
Aggresive buy with stop below 3300
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