KUALA LUMPUR: Malaysian palm oil futures ended higher on Tuesday, pausing a slide from the previous day's session as weak prices attracted buyers, although poor sentiment from external markets capped gains and kept prices near 2-1/2 week lows.
Prices of palm on Monday reopened after the Lunar New Year break to weak US soyoil markets and sluggish export demand, which dragged the contract to its lowest level in since February 5.
But buying interest trickled in as prices hovered near 2,200 Ringgit levels, traders said, further helped by a weak currency that makes the Ringgit-priced feedstock cheaper for overseas buyers.
"Traders are of the opinion that prices are poised for some recovery with the weaker Ringgit providing better margins and improving demand," said a trader with a local commodities brokerage in Malaysia.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange gained 0.8 percent to close at 2,257 Ringgit ($620) per tonne on Tuesday, reversing some losses earlier in the session.
Traded volume stood at 49,188 lots of 25 tonnes each, above the usual 35,000 lots.
The Malaysian Ringgit fell to 3.6400 against the US dollar on Tuesday.
Traders have turned optimistic about lower-than-expected crude palm oil production in world's top producer Indonesia, the Malaysia-based trader said, which may help halt a build-up in stockpiles for now.
Market talk is that Indonesian palm output in January fell between 7-11 percent from December, versus trade estimates for a 5 percent drop, the trader said.
However, weak sentiment in comparative soy and crude markets exerted pressure on palm oil, the world's most traded vegetable oil, as it struggles with a poor technical outlook.
"Technically, palm looks weak. External factors are not good, you've got weak closings for soyoil and crude," said another trader with a foreign commodities brokerage in Malaysia.
Brent crude oil fell towards $58 a barrel on Tuesday ahead of key industry data expected to show further builds in US inventories due to heavy over-supply. US crude was down 50 cents at $48.95.
The US soyoil contract for May pulled up 0.4 percent in late Asian trading, but prices were still pressured by worries over plentiful domestic stocks of the oilseed in the 2015-16 marketing year, which comes at a time when bumper soy harvests are anticipated from South America.
China's markets are still on a break for Lunar New Year and will reopen on February 25.
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