Malaysian palm oil futures hit more than two-and-a-half-year highs on Tuesday amid firmer soyaoil in China and worries over weaker production in the monsoon season, before paring some gains to settle 1 percent lower. "The market is down purely on profit-taking in the afternoon session after it rallied since early this month," said a trader in Kuala Lumpur.
The benchmark Malaysian palm oil contract fell 42 ringgit to 3,680 ringgit ($1,171.975)on profit taking after touching an intraday high of 3,766 ringgit. Overall traded volume more than doubled to 24,180 lots of 25 tonnes each. Traders are also monitoring Malaysian palm oil exports data for the first half of December set to be released on Wednesday.
Cargo surveyor Societe Generale de Surveillance earlier said palm oil overseas demand for the first ten days of this month fell 9 percent to 351,598 tonnes from a month ago. But concerns over supply tightness due to heavy rains during monsoon season kept a lid on palm prices.
Heavy rains, which normally run from November to February, could curb palm fruit harvesting and hamper transport from plantation to refineries. A Reuters technical analyst set a new bullish target for Malaysian palm oil at 3,850 ringgit a tonne, based on a channel technique. The most active September 2011 soyaoil on China's Dalian Commodity Exchange jumped 1.5 percent to a new one-month high in Asian hours.
"China followed the rally in US soya complex the previous session, driven by firm crude and strong economic data from China," said an oil analyst in China's main soyabean producing area, Heilongjiang province. US soyaoil for December delivery however fell 0.6 percent.