Malaysian palm oil futures ended lower for the first time in five days on Wednesday, reversing some gains made in the morning session as prospects of dwindling export demand curbed buying interest and prompted investors to book profits. Benchmark prices, however, hovered just below a September 2012 high first touched on Tuesday, due to lingering concerns that dry weather would hinder output of the tropical oil.
"Everyone was anticipating exports in February 1-20 to rise about 15-17 percent. But now there are rumours of only a 8 percent rise, and that triggered some profit-taking," said a trader with a local commodities brokerage in Malaysia. The benchmark May contract on the Bursa Malaysia Derivatives Exchange edged down 0.1 percent to 2,712 ringgit ($822) per tonne by Wednesday's close. Prices had earlier touched 2,734 ringgit, their highest since September 21, 2012.
Total traded volume stood at 44,123 lots of 25 tonnes, above the usual 35,000 lots. A surge in exports in the first half of the month had lifted hopes of a recovery in demand from top consuming countries. Malaysian palm oil shipments between February 1-15 rose 27-32 percent from a month earlier, due to bigger demand from China, Europe and Pakistan. Market participants said the dry weather in Malaysia and Indonesia, where most of the world's oil palm is grown, could hinder production and tighten supplies of the edible oil which is used to make soaps to cookies and biofuel.
Technicals showed that Malaysian palm oil faces resistance at 2,738 ringgit per tonne and may retrace to 2,712 ringgit, said Reuters market analyst Wang Tao. In vegetable oil markets tracked by palm, the US soyoil contract for May fell 0.5 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange rose 0.9 percent.
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