Palm oil rises

Malaysian palm oil futures ended higher on Wednesday, reversing losses from the early session as a round of technical buying and short covering underpinned it, although a drop in crude oil prices and a stronger ringgit limited gains. The benchmark February contract on the Bursa Malaysia Derivatives Exchange had inched up 1 percent to 2,239 ringgit ($668) per tonne by the day's close, recovering from a decline of as much as 0.5 percent in early trade.
Total traded volume stood at 49,731 lots of 25 tonnes, above the usual 35,000 lots. "Prices could not close below 2,190 ringgit in yesterday's trade so it pulled up. After testing that support level, prices should move higher to test the resistance between 2,280-2,300 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur. "Fundamentally, there's no real push - it's all technical."
The rise, however, was limited to futures prices while spot month prices did not rally, traders said. A second Kuala Lumpur-based palm oil trader said profit-taking after the recent selldown in future prices also provided support. Prices of palm oil, the world's most traded vegetable oil, were pressured by gains in the Malaysian ringgit as well as lower crude oil prices that reduces palm's attractiveness to be used as an additive for biofuel blending. "We expect further gains in Bursa crude palm oil future prices to be short-lived by the ringgit's appreciation," said Lingam Supramaniam, director at Malaysia-based commodities firm Pelindung Bestari. Brent crude oil steadied below $79 a barrel on Wednesday after Saudi Arabia signalled it was unlikely to push for a major change in Opec oil output despite a collapse in prices. Market players are also watching for a vegetable oil industry meet in Indonesia this week, as well as a meeting of oil ministers from the Organisation of Petroleum Exporting Countries (Opec) on Thursday. In other competing vegetable oil markets, the US soyoil contract for December rose 0.1 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange fell 0.5 percent.