Palm oil flat

Malaysian crude palm oil futures closed unchanged on Wednesday as an improving global economic outlook offset profit-taking after a weather-fuelled rally that lifted the market to a six-week high the previous day. For the first week of the new year, markets are focusing on dry weather in South America hurting soy yields and the chances of heavy Southeast Asian rains disrupting palm oil production.
"Futures were a little overbought yesterday. Albeit the strong sentiment, product buyers were not enthusiastic at all yesterday. The high prices will dampen the already anaemic demand," said a dealer with a local commodities brokerage in Malaysia. Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange closed unchanged at 3,225 ringgit ($1,000) per tonne.
The market started the year strongly on Tuesday, hitting a six-week high of 3,244 ringgit, a level unseen since November 21. Palm oil futures are expected to peak at about 3,270 ringgit according to a wave analysis, said Reuters market analyst Wang Tao. Traded volumes for palm oil futures on Wednesday stood at 18,284 lots of 25 tonnes, thinner than the usual 25,000 lots as some traders said they were waiting for further cues.
"There is no new catalyst. We have been talking on weather for too long and now all eyes are on December stock level," said another trader with a foreign commodities brokerage in Kuala Lumpur. A Reuters survey of seven plantation firms showed on Wednesday that Malaysia's palm oil stocks for December are likely to drop 5.7 percent from November to a five-month low of 1.95 million tonnes.
On the weather front, the Malaysian Meteorological Department issued a warning that heavy rains may trigger floods over low-lying areas in key oil palm growing states of Johor, Pahang, Sabah and Sarawak, which account for almost three quarters of national palm oil output. For top producer Indonesia, crude palm oil output is expected to climb 6 percent to 25 million tonnes this year due to rising plantation areas, the Indonesian Palm Oil Association (Gapki) said on Wednesday. US soyoil for January delivery inched down 0.5 percent in Asian trade after rallying in the previous session on Argentine weather worries. The most active September 2012 soyoil contract on China's Dalian commodity exchange gained 1.2 percent on the back of stronger global economic sentiment.