Malaysian palm oil futures edged down in thin volume on Tuesday after gains in the previous session lifted prices from near two-month lows, with traders focusing on a key industry conference to determine strategies.
By the mid-day break, the benchmark May contract on the Bursa Malaysia Derivatives Exchange fell 0.5 per cent to RM2,400 per tonne. Prices traded in a tight range of RM2,395 - RM2,428.
Total traded volume was thin at 7,957 lots of 25 tonnes each, nearly half of the usual 12,500 lots.
A technical bounce on Monday had helped prices snap eight straight sessions of declines and move higher from levels last seen in mid-January.
"There was an attempt to push the market higher yesterday and some anticipation about a follow through in buying, but nothing materialised," said a trader with a local commodities brokerage in Malaysia.
"Traders are mostly waiting on the analysts and speakers for more clues. There will probably be slow trading until tomorrow," he added. The palm oil conference being held in the Malaysian capital runs March 4-6.
Technicals showed Malaysian palm oil is expected to either hover around a resistance level of RM2,418 per tonne or rebound to RM2,450, said Reuters market analyst Wang Tao.
Palm oil refineries with a combined capacity of 1.8 million tonnes plan to halt operations if a Malaysian military attack on an armed Filipino group on Borneo island drags on, refinery officials told Reuters on Tuesday.
Sabah, part of Borneo island, is Malaysia’s top oil palm growing region, accounting for a quarter of national production.
Much of the palm oil from Sabah is shipped to China — the world’s second-largest consumer of edible oils.
The development was not impacting prices significantly so far, traders and analysts said.
"If the turmoil drags on for weeks and months, it could have a more severe impact on production," CIMB Investment Bank said in a note. "The security fears may also affect the operations of ports located near where the clashes are taking place."
In other markets, Brent crude futures rose towards US$111 per barrel on Tuesday, bucking a five-day losing streak on bargain buying after China pledged to keep its economy growing at 7.5 per cent.
In competing vegetable oil markets, US soyoil for May delivery edged down 0.1 per cent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodity Exchange inched up 0.2 per cent.-- Reuters