KUALA LUMPUR, Jan 17: Malaysian palm oil futures edged down on Thursday as investors locked in profits after steady gains in prices, although market optimism was capped by a dismal export performance in the first half of January.
The tropical oil posted gains this week after Malaysia, the world’s no.2 producer, said it would keep its crude palm oil export tax at zero percent in February to spur shipments and cut stockpiles which hit a record 2.63 million tonnes in December.
Traders also took cues from hints of recovering demand from major buyers as temperatures become warmer and more suitable for palm oil, which solidifies in winter.
‘We are seeing some profit-taking today. For the rest of the week the market is going to trade on a rangebound basis,’ said Phillip Futures analyst Ker Chung Yang in Singapore.
‘We have positive sentiment from the zero-duty tax structure, but at the same time we also have cargo surveyor data showing us Malaysian exports falling by double digits.’
By the midday break, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had inched down 0.6 percent to 2,417 ringgit ($800) per tonne.
Total traded volume stood at 16,603 lots of 25 tonnes each, higher than the usual 12,500 lots as investors traded to lock in profits.
Technical analysis showed that Malaysian palm oil may end its current rebound around resistance at 2,449 ringgit per tonne, retracing to 2,403 ringgit, said Reuters market analyst Wang Tao.
Malaysia, which neighbours top producer and rival Indonesia, has been struggling with record stocks since September due to tepid global economic conditions and the euro zone crisis which have stifled demand and caused prices to tumble 23 percent in 2012.
While end-stocks are expected to slowly shrink in the first quarter of the this year on the back of a seasonally slowing production, sluggish exports could crimp any recovery in prices.
‘For December we have stocks at 2.63 million tonnes. My assumption is that we are not going to see a 3 million tonne stock level, but it all depends on how exports play out for the rest of the month.’
Brent futures slipped on Thursday as signs of a weakening global economic outlook revived demand worries, but the contract stayed above $109 a barrel on supply concerns after Islamist militants attacked an Algerian gas field.
U.S. Soyoil for March delivery fell 0.5 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange rose 0.4 percent.
(agencies)
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