Malaysian palm oil futures ended lower on Thursday as investors turned cautious about risky bets, but uncertainty about supplies of competing edible oil from the Philippines propped up prices. Palm oil prices rose to near two-week highs on Wednesday on concerns that Typhoon Haiyan had damaged coconut crops in the Philippines and could disrupt the supply of coconut oil from one of the world's top producers.
By Thursday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had edged down 0.6 percent to 2,588 ringgit ($809) per tonne, with prices moving in a tight range between 2,583-2,617 ringgit. Total traded volume stood at 29,368 lots of 25 tonnes each on Thursday, lower than the average 35,000 lots as some investors chose to stay on the sidelines.
Any shortage of Philippine coconut oil could channel demand to palm oil-based substitutes such as palm kernel oil. The price of crude palm kernel oil rose to 3,802 ringgit per tonne on Thursday from 3,720 ringgit on Wednesday in choppy trade. Futures market players are avoiding risk as prices hover near the 2,600 ringgit mark, waiting for more news on export demand and Southeast Asian palm output.
"The 2,600 ringgit level is a critical point. Buyers and sellers are a bit cautious - people are unsure and are waiting for the next bit of news before making any moves," said a trader with a foreign commodities brokerage Palm oil futures will probably trade in a range of 2,400-2,600 ringgit over the next six months, leading industry analyst Dorab Mistry said on Thursday, but they could climb as high as 2,800 ringgit depending on output in top producer Indonesia and the success of its biodiesel mandate. In competing vegetable oil markets, the US soyaoil contract for December rose 0.4 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange rose 1 percent.
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