Malaysian palm oil futures ended little changed on Thursday as expectations of higher demand and lower output were offset by lingering worries about global economic growth. The benchmark November contract on the Bursa Malaysia Derivatives Exchange ended 0.2 percent lower at 3,026 Malaysian ringgit ($1,016) per tonne. It earlier hit a high of 3,043 ringgit, to hover near two week highs.
Traded volumes for the contract were 11,513 lots of 25 tonnes each, compared to 11,344 lots on Wednesday, which was a national holiday in Indonesia, the world's top palm oil producer. "The market is trading in a range," said a Kuala Lumpur-based trader. "The palm fundamentals remain strong but the weakness is due to the global economy."
World stocks fell on Thursday as heightened worries about sluggish economic recovery prompted investors to cut exposure to riskier assets, while the Swiss franc fell as the central bank took further steps to halt its steady rise.
"The market is quiet today and in a tight range," said another Kuala Lumpur-based trader. "People are looking for new developments before it can move." In other vegetable oils, US soybeans for November delivery dipped, while the most active May 2012 soyoil on China's Dalian Commodity Exchange was flat. Palm oil's fundamentals remain bullish however, despite the uncertain economic outlook.
Earlier this week, Malaysian palm oil exports for the first 15 days of August rose more than a fifth and traders expect the trend to continue. Malaysia is the world's second largest palm oil producer. Traders and analysts say output is likely to fall in the coming weeks, as estate workers take extended leave for Ramazan, which will end with Eid celebrations in late-August. "Local sentiment is quite strong, in terms of production being down this month, and demand could be higher," said the second Kuala Lumpur-based trader. Malaysian palm oil is expected to reverse a minor rebound from the August 16 low of 2,993 ringgit per tonne and fall back to this level, a Reuters market analyst for commodities and energy technicals said.
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