Malaysian palm oil futures inched up on Friday as investors waited for a weekend meeting of eurozone leaders for signs of resolving the region's debt crisis that could plunge the world into recession if left unchecked.
Palm oil futures are set for their smallest weekly gain in October with prices see-sawing this week on conflicting reports over European governments reaching a deal to contain the crisis that could slow economic growth and commodity demand.
France and Germany cleared the confusion by saying on Thursday that leaders would discuss a holistic solution to the crisis on Sunday although no decision will be adopted before a second meeting to be held by Wednesday. Palm oil is widely used in Europe, the second-largest consuming region after Asia, for food and fuel. A slowdown in Europe could weaken some demand although palm oil could maintain its market share in the region as it is the cheapest edible oil.
"It is all eyes on the eurozone. They better get it right this time as there is too much uncertainty in markets like palm oil that are not fully reflecting fundamentals," said a trader with a brokerage in Kuala Lumpur. Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange settled up 0.6 percent to 2,883 ringgit ($921.292) before going as high as 2,903 percent.
Traded volumes were light at 21,057 lots of 25 tonnes each, compared to the usual 25,00 lots as most of the market was cautious ahead of the European summit. Reuters technical analyst Wang Tao said palm oil will revisit the previous trading session's low of 2,822 ringgit as it will continue a short-term downtrend that started at the October 17 high of 2,946 ringgit.
The market on Thursday came under pressure after cargo surveyors said Malaysian palm oil exports were above 1.03 million tonnes for October 1-20 compared to the same period a month ago, meeting expectations. European demand lifted exports. US soyoil for December delivery rose 0.3 percent in Asian trade on cautious optimism ahead of the European meeting although gains were curbed by a rapid US soy harvest. China's most active May 2012 soybean oil contract and RBD palm olein both rose more than 1 percent.