Malaysian crude palm oil futures rose on Thursday after a rebound in rival soyoil prices lured investors back into the market, but fears of weaker exports kept them cautious. Palm oil, which surged to an all-time record high of 3,420 ringgit last week, has wiped out most of its gains this year.
As a looming US recession gripped world markets, with concerns that commodity demand would wane. The benchmark April contract on the Bursa Malaysia Derivatives Exchange rose 19 ringgit, or 0.6 percent, to 3,134 ringgit ($960), after falling as much as 70 ringgit to 3,045 ringgit a tonne in early trade.
"This is an excuse for speculators and fund managers to get back into the palm oil market to take it higher and then sell down. We will see this market touch 3,000 ringgit levels pretty soon," said a dealer with a local brokerage.
Other traded months ranged between a 20 ringgit rise to a decline of 2 ringgit. Overall trade was 14,715 lots of 25 tonnes each, nearly triple the 5,000 lots that usually change hands by the end of the morning session. Soyoil futures at the Chicago Board of Trade regained its footing early on Thursday after a Wall Street rebound on optimism that a rescue plan for US bond insurers may be in the offing.
Soyoil and palm oil compete for use in a variety of products ranging from potato crisps and shampoos to biofuel. Traders said demand for palm oil will dry up further in January and expect bearish January 1-25 export numbers, due to be released on Friday by cargo surveyors.
Surveyor Intertek Testing Services reported a decline of 40.02 percent to 567,583 tonnes for January 1-20, while Societe General de Surveillance said exports for the same period fell 35.8 percent to 619,078 tonnes.
"Exports are heading south and for January, it looks as if there will be struggle to get total orders of 1 million tonnes," said an analyst with a foreign brokerage. In Malaysia's physical market, crude palm oil for January and February shipments in the southern region was quoted at 3,110/3,120 ringgit a tonne. Trades were done between 3,100 and 3,110 ringgit.