Malaysian palm oil ended almost flat on Wednesday with the market split between higher output prospects this month and firmer crude oil markets that rose on concerns over Middle East supply disruptions. "If crude continues to go up, palm oil will get support," said a trader with a foreign commodities brokerage. "But right now, the production pick up and lower exports will see stocks rise again and this will pressure prices as well," he added.
The benchmark June crude palm oil contract on the Bursa Malaysia Derivatives shed 2 ringgit to settle at 3,306 ringgit ($1,091) a tonne after a session of choppy trading. Prices ranged between 3,301 and 3,367 ringgit. Overall traded volume shot up to 26,032 lots of 25 tonnes each from the usual 15,000 lots.
Output in Malaysia's key southern growing region, which accounts for 30 percent of national output, is set to strengthen in March on favourable growing weather. The production recovery comes as exports for the first 20 days of March dropped by at least a tenth from the same period a month ago. "Fundamentally our market is bearish as Malaysian Palm Oil Association reported production in the first half of this month could rise 16 percent," said another trader in Kuala Lumpur. "Market has no way to go up," he added.
Oil steadied on Wednesday due to concerns that unrest in Yemen may spill over into neighbouring countries in the oil rich Middle East Gulf region, while an expected increase in US crude inventories capped gains prices. Higher crude oil gave some support to markets. Chicago soyoil for May delivery was almost flat as investors remained cautious ahead of the US Department of Agriculture's planting report due on March 31. The most active September soyoil contract on China's Dalian Commodity Exchange rose 1 percent. Hamburg-based oilseeds analysts Oil World on Tuesday said global September 2010/February 2011 exports of soyoil are estimated to have surged 34 percent on the year to a 3-year-high of 5.1 million tonnes as business was won from palm oil.
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