Malaysian palm oil futures rebounded on Monday in tandem with stronger commodity markets as solid US payrolls data showed global economy was on track for recovery although fundamentals for the tropical oil remain uncertain.
Palm oil has lost nearly 15 percent so far this year on rising stocks and still weak demand. It also fell to a six month low last week along with a broad sell-off in commodities as traders initially fretted over the state of the US economy and reduced risk taking.
"Stable global market has pulled up palm oil prices, but there still full of uncertainty and volatility in this market," said a trader in Kuala Lumpur. The benchmark July crude palm oil contract on Bursa Malaysia Derivatives rose 0.9 percent to 3,228 ringgit ($1,074.746) per tonne. The same contract hit a 6-month low of 3,195 ringgit on Friday.
Overall traded volume were low at 9,372 lots of 25 tonnes each, compared to the usual 12,500 lots. A Reuters technical analysis showed the benchmark palm oil contract is expected to rebound into a range of 3,250 to 3,300 ringgit per tonne, as a triangle pattern may fail.
Supply concerns stemming from uncertain weather in Americas also supported the market ahead of key US agriculture data which due on Wednesday. The data will give its first estimate of ending stocks for this year's corn and soybean crops. Additionally, it will update global crop production numbers, including corn and soy output in Brazil and Argentina.
Chicago wheat rose more than 2 percent on Monday, while corn added 1 percent, as investors bought back grains on concerns over unfriendly crop weather in the United States and Europe. US soyoil for July delivery rose 0.5 percent in Asian hours and the most active January 2012 soyoil on China's Dalian Commodity Exchange inched up.
"Rebound we see today is a kneejerk reaction, in overall, soyoil still trading downwards,"said an oil analyst with Shanghai-based local brokerage. "However, supply worries due to expectation of weaker soybean and rapeseed production in the country could continue support the market." Soybean output in China is expected to fall 2 to 4 million tonnes in late August as planting intentions have shifted to the lucrative corn crops.
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