Malaysian palm oil futures reversed track to gain for the first time in almost a week on market short covering and expectations of lower inventories at the end of February. The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 0.7 percent at 2,537 ringgit ($601.76) per tonne at the end of the trading day.
Traded volume stood at 47,812 lots of 25 tonnes each. "We do expect further drawdowns in February stocks, although exports remain lower," said Kuala Lumpur-based trader. "I think the market does expect lower prices in view of weaker overseas demand." Palm futures fell in the last five sessions due to concerns over an unexpected rise in production in the first 20 days of February. However, Malaysian stockpiles have been falling since charting a record high of 2.9 million tonnes in November.
Shipments for the vegetable oil fell 14.8 percent during February 1-25 compared with the corresponding period a month ago, data from cargo surveyor Intertek Testing Services showed on Thursday. Demand for palm oil has been falling on lower consumption from top consumers - China and India. Palm oil is expected to break a resistance at 2,549 ringgit per tonne and rise towards the next resistance at 2,576 ringgit, as suggested by its wave pattern and a Fibonacci projection analysis, according to Reuters market analyst for commodities and energy technicals Wang Tao. In competing vegetable oil markets, the May soybean oil contract on the Dalian Commodity Exchange lost 0.7 percent, while the Chicago soyoil contract rose 0.4 percent.
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