Malaysian palm futures recovered nearly two-thirds of the day's loss after tumbling to nine-day lows on short-covering, but still finished in the red for a third straight day on Wednesday, traders said. An early sell-off was sparked by faltering soy and crude oil prices amid recession fears, while late buying was partly fuelled by hopes that Malaysian palm stocks may continue to fall this month.
"I don't think there is any sudden change in fundamentals of palm. Outside factors prompted the selling in early session but we saw support below 1,850 ringgit level," said a trader at a Kuala Lumpur based brokerage firm. "Stocks are not really a concern. We should see end stocks for February close to 1.7 million tonnes. So it is still going to fall," the trader said.
Falling Malaysian palm stocks are key in supporting the prices of the tropical oil, which have steadily climbed from the October 28 low of 1,331 ringgit. The benchmark May contract fell 20 ringgit, or 1.1 percent, to 1,875 ringgit ($513) per tonne, having gone down as low as 1,842 ringgit, the level unseen since February 6.
The benchmark contract has failed to hold above the key resistance level of 2,000 ringgit in recent rally amid concerns over prospects for demand. Other traded contracts fell between 16 and 34 ringgit. Overall volume was 13,076 lots of 25 tonnes each.
Soyoil for March delivery fell 0.5 percent by 1027 GMT in electronic trading. The most active May soyoil contract on China's Dalian exchange was down 4.98 percent. US oil prices slid towards $34 a barrel on Wednesday, extending Tuesday's nearly 7 percent losses on renewed economy concerns, slumping demand and bloated inventories.
INDONESIA PALM TRADES
In Indonesia, the world's biggest palm oil producer, the Jakarta-based state marketing centre sold the entire 5,500 tonnes of palm oil it offered in an auction at a top price of 6,851 rupiah per kg, down from 7,038 rupiah per kg on Tuesday. Producers in Medan, which is home to Belawan port, Indonesia's main palm oil export port, did not hold a palm oil auction.
Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 7,500 rupiah per kg against 7,400 rupiah per kg on Tuesday. In the physical market, Malaysian palm oil for February and March deliveries was traded at 1,890-1,910 ringgit a tonne in the central region, and at 1,890-1,905 ringgit a tonne in the southern region.
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