Malaysian palm oil futures inched up on Monday, pulling out of an oversold situation to snap eight straight sessions of losses while investors keep an eye on an industry conference for more clues on the vegetable oil’s outlook.
Palm prices fell more than six per cent last week, notching the biggest weekly loss since mid-November as soy markets in China and the US suffered from predictions of potential bumper South American soybean crops.
Traders are also watching Bursa Malaysia’s annual palm oil conference which kicks off on Monday, and will focus on price outlooks and industry clues from leading analysts including Dorab Mistry and James Fry.
"The market edged higher today on a technical bounce as it was oversold," said a dealer with a foreign commodities brokerage in Malaysia.
"A lot of people will be watching the market during the palm oil conference. They are more cautious," said another trader with a foreign commodities brokerage.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange had gained 1.8 per cent to RM2,411 per tonne by Monday’s close. Prices traded in a tight range of RM2,375 - RM2,415.
Total traded volume stood at 36,692 lots of 25 tonnes each, slightly higher than the usual 25,000 lots.
Technicals showed Malaysian palm oil is expected to test a support at RM2,361 per tonne, with a good chance of breaking this level and falling to RM2,306, said Reuters market analyst Wang Tao.
China’s palm oil stocks most probably rose to a record 1.4 million tonnes in February as imports surged late last year ahead of stricter quality regulations from January 1, a Reuters survey of five Chinese traders and analysts showed.
Dismal palm oil export data also triggered investor worries that a 4.5 per cent export tax hike on crude palm oil beginning March could stifle demand for Malaysian palm oil products and keep stockpiles high.
Investors are pinning hopes that seasonally slowing output and a wide US$300 discount to competing soyoil would shift demand to Malaysian palm, the cheapest vegetable oil in the market, but say exports need to pick up faster to run down the current 2.58 million tonne stockpile.
Brent crude futures slipped towards $110 per barrel on Monday, extending their more than 7 per cent drop of the past three weeks, hurt by concerns a fiscal crisis in the US and worrying data from China would sap demand in the top two consumers.
In competing vegetable oil markets, US soyoil for May delivery edged down 0.1 per cent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodity Exchange rose 0.9 per cent.-- Reuters