Malaysian palm oil ends down, support seen at 1,400

Malaysian crude palm oil futures closed lower on Wednesday in thin trade after a drop in Chicago prices, but fears of local supply disruption after heavy rains will help prices hold above 1,400 ringgit a tonne, traders said.
An expected seasonal decline in production from next month would prevent a sharp fall in prices, despite plentiful stocks and lower-than-expected exports in December.
"The market is finding support from weather problems," said a trader. "Supplies might be affected to some extent."
Third-month March ended down 3 ringgit at 1,406 ringgit ($372) a tonne. February fell 3 ringgit to 1,400.
But April was up 1 ringgit at 1,410.
Overall volumes dropped around 63 percent to 1,809 lots from Tuesday's 4,917 lots on short covering.
"We saw a correction but (it) looks like people are more convinced that production could be down this month," said another trader, adding that production may fall about five percent compared with last month.
Data released last week showed end-November stocks of the commodity stood at a record 1.6 million tonne following a slowdown in demand with the end of most major festivals in Asia. "We are seeing a very tight range," the trader said, adding that the market would probably find support at 1,400 ringgit and meet resistance at 1,420.
On Tuesday, soya products on the Chicago Board of Trade were lower in late trading as technical buying by commodities funds dried up.
Sell-stops were hit in March Soyaoil below 21.50 cents per lb., traders said. CBOT January Soyaoil fell 0.12 cent to 21.19 cents per lb., while March was 0.04 lower at 21.50 cents. Activity on the spot market was subdued. In physical dealings of crude palm oil, the December contract saw buyer/sellers at 1,390/1,395 ringgit a tonne in both southern and central regions.
Trades were reported at the same prices in both regions. For January delivery, offers were quoted at 1,400 ringgit a tonne, against bids at 1,395. No deals were reported.
"We are seeing some buyers at 1,395 ringgit while sellers are offering at 1,400," said a trader, referring to December cargoes. "The palm products market is not moving as there are no end buyers. I don't think the market is going anywhere."