Short-covering after recent selling, as well as expectations of good exports for January, fuelled a rally in Malaysian palm oil futures on Monday after a slow start. The benchmark third-month crude palm oil contract on Bursa Malaysia Derivatives, April, ended up 20 ringgit or 1.5 percent at 1,314 ringgit ($345.79) a tonne. Other traded contracts rose 13 to 20 ringgit.
The April contract had opened up only 2 ringgit and traded less than a third of usual volume by midday as players awaited word on the latest export estimates for January.
Two surveyors of Malaysian oil palm cargoes, Intertek Testing Services (ITS) and Societe Generale de Surveillance (SGS), are to issue on Tuesday export estimates for the period of January 1 to 25.
Lingering worries about tight availability of vessels for immediate shipment also stifled gains in futures.
But talk in the afternoon that ITS's estimate could be 20,000 to 25,000 tonnes higher than a month earlier resulted in heavy short-covering.
"If you ask me, the rebound had as much to do with covering back from recent selling, although the export numbers helped," said a trader.
With Monday's rally, the April futures contract has recouped nearly all of the 22 ringgit loss it suffered on January 18.
A substantial recovery in exports over the last two weeks after a lean start to 2005 has given players hope that prices might soon re-test the 1,400 ringgit a tonne barrier - a level not seen since mid-December.
But tight freight space for nearby months was putting a damper on such hopes, dealers said.
A surge in the movement of "clean petroleum products" - mainly fuel used for industrial purposes - as bunker prices soared last week has left palm exporters with few vessels to carry their oil.
A Reuters poll of leading Malaysian plantations on Monday put exports for the whole of January at 1.08 million tonnes, down 4 percent from the official 1,124,726 tonnes for December.
ITS has so far quoted a figure of 643,330 tonnes for January 1 to 20 and 805,247 tonnes for December 1 to 25.
SGS, whose data is more closely watched by the market for its detailed breakdown of the different oils exported, had estimated a shipment of 645,453 tonnes for January 1 to 20 and 852,577 tonnes for December 1 to 25.
Overall volume in futures trade on Monday was 6,759 lots of 25 tonnes each, against last Thursday's 3,797 lots. The market was closed on Friday for a Muslim religious holiday.
In the physical crude palm oil market, contracts for January and February saw bids at 1,325 ringgit a tonne and offers at 1,330 ringgit in Malaysia's southern and central regions, against Thursday's close of 1,312.50/1,320.
Trades were reported at 1,320-1,325 ringgit a tonne for both months and regions.
PALM OIL FUTURES:
January (south): 1330.
Open/High/Low: 1296/1314/1292.
Previous close: 1320.
PALM OIL PHYSICALS: April (3rd month): 1314.
Previous settlement: 1294.
FUTURES: Benchmark April up 20 ringgit at 1,314 ringgit ($345.79) a tonne.
PHYSICALS: January offers up 10 ringgit a tonne.