Palm oil flat

Malaysian palm oil futures ended flat on Tuesday, trading near 17-month highs as lower production expectations due to dry weather conditions were offset by weaker comparative vegetable oils. The benchmark May contract on the Bursa Malaysia Derivatives Exchange ended flat at 2,805 ringgit ($850) per tonne. On Monday, prices hit 2,860 ringgit, their highest since September 20, 2012.
"The market seems to be holding quite well above 2,800," a trader with a foreign commodities brokerage said. "The underlying fundamental is still holding firm - the weather worries." Biodiesel demand in top palm producer Indonesia was also aiding benchmark prices, said the trader. Concerns over dry weather tightening palm supplies in dominant Southeast Asian producers Indonesia and Malaysia have helped palm prices gain around 5 percent this year.
"Most of Indonesia will have longer and drier dry season this year," said Andi Eka Sakya, head of Indonesia's meteorology climatology and geophysics agency, mainly due to an El Nino weather pattern occurring after June. Market participants are keeping watch for price outlooks from key industry speakers at an industry conference in Kuala Lumpur that runs from March 3-5. Palm oil imports in China, a major buyer of the vegetable oil, are likely to take a hit in coming months as stockpiles at major ports have risen to near record highs of around 1.2 million tonnes on weak domestic demand, traders told Reuters on the conference sidelines.
The US soyoil contract for May fell 0.5 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange was unchanged. In technicals, Malaysian palm oil is expected to peak around a resistance at 2,883 ringgit per tonne and start a deep correction thereafter, said Reuters market analyst Wang Tao. United Plantations Bhd said palm oil prices could rise above 3,000 ringgit ($910) a tonne this year, up more than 6 percent from current levels, if dry weather continues in Southeast Asia, the firm's chief executive said. Total traded volume on Tuesday stood at 31,731 lots of 25 tonnes, slightly less than the average of 35,000 lots.