Malaysian palm oil ends up ahead of July crop data

Malaysian crude palm oil futures were up on Tuesday as short covering helped reverse losses and snap a three-day losing streak. But volume was just above average as players awaited the release of key supply/demand data for July. The market, down in trade, rebounded on news that palm oil would make up five percent of bio-diesel under a government policy to be announced on Wednesday.
Malaysia, the world's largest producer of palm oil, plans to cut diesel imports by 500,000 tonnes a year with a plan to produce bio-diesel using a mix of palm oil and diesel, an industry official told Reuters on Tuesday.
"It may be small but it will still help to clear some of the stocks. But we have to see first how this develops and how viable it is," said a trader.
Malaysia's palm oil stocks stood at 1.18 million tonnes at the end of June. At the close, the benchmark third-month palm oil contract on Bursar Malaysia Derivatives, October, was up 9 ringgit at 1,349 ringgit ($359.95) a tonne.
Other traded months in palm oil closed up 5 to 11 ringgit on Tuesday. Overall volume stood at 4,662 lots of 25 tonnes each, almost the same as on Monday but still thinner than the 6,000 lots seen on an active day.
Traders attributed the slow market to apprehension ahead of Wednesday's release of official production, exports and closing stock figures for July.
A Reuters survey of five plantation firms showed on Monday that output of palmoil in Malaysia could be 5.2 percent higher in July than June due to a fresh rise in yields.
Two independent shipping surveyors will also issue on Wednesday export estimates of palm oil for the first 10 days of August. In physical dealings of crude palm oil on Tuesday, August contract was offered at 1,340 ringgit a tonne and bid at 1,335 in the southern and central regions of Malaysia.
Trades were reported at 1,330-1,335 ringgit in the south and 1,330 in the central region.
PALM OIL FUTURES:
August (south): 1340.
Open/High/Low: 1335/1350/1329.
Previous closes: 1335.
PALM OIL PHYSICALS:
October (3rd month): 1349.
Previous settlement: 1340.
FUTURES:
Up on short-covering after news that Malaysia would use palm oil for a biofuel, cutting back on 500,000 tonnes of diesel imports a year.
PHYSICALS: Also up.