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Palm oil retreats from seven-month high

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Palm oil hit a seven-month high on Monday on talk of waning palm stocks before being dragged lower by a falling oil price.

The benchmark June contract rose 3.1% to 2,371 ringgit per tonne - its highest price since late September - on Bursa Malaysia before losing some ground in afternoon trade.

The rise, which took palm oil's gains this year to nearly 40%, followed a batch of data which fuelled speculation of a tighter market to come.

Shipping spree

On Friday, Societe Generale de Surveillance, a cargo surveyor, said that exports of Malaysian palm oil products rose 3.7% in the first 10 days of April, compared with the previous 10 days. Intertek Testing Services, a rival surveyor, reported an 8% rise over the same period.

Meanwhile, a palm oil stocks report from the Malaysian Palm Oil Board came out in line with analysts' forecasts at 1.364m, the lowest since June 2007.

Nonetheless, weakness in the oil market, prompted by Friday's International Energy Agency report that global demand would fall 2.4 million barrels per day this year, persuaded many palm oil investors to take profits. The June contract had lost all its gains to stand at 2,299 ringgit per tonne at 07:45 GMT.

'Good buying opportunity'

Elsewhere, soybeans continued to be supported by last week's US data showing global stocks heading for their lowest for five years. Chicago soybeans for May delivery stood 5.5 cents higher at $10.12 ½ a bushel.

"The soy market is really strong," Kaname Gokon, a manager at Tokyo broker Okato Shoji , told Reuters.

"It's a good buying opportunity. We have a price forecast of $10.50 a bushel by the end of this week for the May contract."

However, corn and wheat remained grounded. May corn was 4 cents lower at $3.86 ¼ a bushel, with wheat off 3 .75 cents at $5.18 ¼ a bushel.

By Mike Verdin

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