Malaysian palm oil futures came off near three-month lows to
trade higher on Tuesday evening on concerns about a decline in February production,
traders say. Market signals, however, were mixed earlier in the day as some
forecast output gains while exports in February are expected to improve,
traders said.
Benchmark palm oil futures for April delivery on the Bursa
Malaysia Derivatives Exchange were up 0.4 percent at 3,049 ringgit ($685.48) a
tonne at the end of the trading day. Earlier in the session, they hit 3,011
ringgit, their lowest levels since Nov. 25, 2016. However, Traded volumes stood
at 61,882 lots of 25 tonnes each on Tuesday evening.
A Kuala Lumpur-based trader said physical prices were still
very strong, indicating that market supplies are still tight due to lower
production levels. Another trader added the market was supported by
expectations of bullish export data from cargo surveyors for the first half of
February due for release on Wednesday.
"That coupled with technical buying since palm prices
rebounded off lows" had aided the market, said the trader. Palm oil
shipments in the first 10 days of February slipped up to 3 percent from the
corresponding period in January, showed cargo surveyor data, as demand for the
tropical oil waned after the Lunar New Year celebrations. As during the Lunar
New Year celebrations, there is more demand for the tropical oil from top
consumer China.
Output levels are still seeing the impact of the
crop-damaging El Nino, but its effects are seen tapering off towards a bigger
recovery by the second half of this year. Production for January declined 13.4
percent to 1.28 million tonnes, its sharpest drop in a year, according to data
from the Malaysian Palm Oil Board on Friday. Palm oil may stabilise around a support at
3,014 ringgit per tonne, and then rise towards a resistance at 3,089 ringgit,
showed analysis by Wang Tao, a Reuters market analyst for commodities and
energy technicals.
In other related edible oils, the March soybean oil contract
on the Chicago Board of Trade rose 0.3 percent, while the May soybean oil
contract on the Dalian Commodity Exchange fell 1.4 percent.