Malaysian palm oil ended Friday's trade 0.52 percent lower, dragged down by declines in rival oils but still supported by short covering in the market. Benchmark palm oil futures for March delivery on the Bursa Malaysia Derivatives Exchange fell to 3,061 ringgit ($684.40)per tonne, after declining to a low of 3,013 ringgit earlier in the session. The contract logged a fifth session of falls in six, and have declined 3.2 percent this week in its biggest fall in four weeks.
Traded volumes were thin with 28,151 lots of 25 tonnes each changing hands. A trader based in Kuala Lumpur said palm, which saw a 2 percent tumble and hit its lowest in four weeks during the session, recovered some of its losses as traders covered positions ahead of the holidays. "There is still some short covering as traders take position for the long weekend," the trader said.
The market is not reflective of palm's current fundamentals, said another trader, adding that volume was low as the year-end holiday season had started and cues were likely to come from external factors. "Physical trade is strong around the 3,200 ringgit levels and demand is there, but the market is trading according to external markets. There are not many traders in the market now, resulting in a herd mentality among those present, tracking the Dalian," the trader said.
The May contract for Dalian soybean oil dropped 2.41 percent, while the palm olein contract fell 2.53 percent. On the Chicago Board Of Trade, the January soybean oil contract slid 0.69 percent. Palm oil may fall further to 2,948 ringgit per tonne as it has broken a support at 3,045 ringgit, said a Reuters analyst for commodities and energy technicals.
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