Malaysian palm oil futures touched their highest in more than a year on Tuesday, riding on the back of a smaller soybean crop and recovering palm oil exports, but ended the day almost flat, as traders scrambled to lock in profit. Prices touched a high of 3,566 ringgit, a level unseen since March 9 last year, driving traders to book profit, and erasing gains after the midday break.
"Today the market volume's a bit light, at around 20,000 lots," said a trader with a foreign commodities brokerage in Malaysia. "There's a bit of profit-taking going on after palm oil broke a new high." Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange eased 1 ringgit to close at 3,532 ringgit ($1,160) per tonne. Traded volumes stood at around 20,406 lots of 25 tonnes each, slightly lower than the usual 25,000 lots.
Malaysian palm oil will gain further to 3,590 ringgit as it has cleared a resistance at 3,528 ringgit, Reuters market analyst Wang Tao said, based on technical analysis. The US Department of Agriculture said farmers would plant 2 percent less of the soybean crop than expected, reinforcing the view that global supply of oilseeds is tightening, lifting palm oil futures to gain close to 11 percent this year.
"At least for the first half of 2012, there's a continuation of supportive news for oilseeds as a whole. The positive sentiment for palm oil will likely stay for the coming week," said Ker Chung Yang, an analyst at Phillip Futures in Singapore. Export demand for palm oil has been picking up in No.2 producer Malaysia after four straight months of declines. March palm oil exports rose 4.8 percent, according to cargo surveyor Intertek Testing Services. Another cargo surveyor, Societe Generale de Surveillance, reported a jump of 3.5 percent for the same period. In other vegetable oil markets, the most active US soyoil contract for May edged down 0.5 percent. China's Dalian Commodity exchange is closed for public holidays and will reopen on Thursday.
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