Palm oil futures closed hardly changed on Tuesday after earlier falling to near six-week lows on persistent worries over the eurozone debt crisis and higher than expected inventory data. Benchmark February palm oil futures on the Bursa Malaysia Derivatives Exchange closed 0.1 percent higher at 3,002 Malaysian ringgit ($950) per tonne.
Traded volumes for the February palm contract were at 9,957 lots of 25 tonnes each, compared with 10,079 lots on Monday. "The market is okay because yesterday it was a bit overdone," said a Kuala Lumpur-based trader. China's most active May 2012 soybean oil contract rose slightly after hitting a near two-week low on Monday. Palm prices have been capped by the latest inventory data from major producer Malaysia, which showed November palm oil stocks fell 1.5 percent to 2,068,754 tonnes in October.
An earlier Reuters survey had forecast stock levels at 1.96 million tonnes for October. "The figures were less than exciting," said a second Kuala Lumpur-based trader. "The market is taking its lead from external markets the underlying sentiment remains weak and cautious." Exports of Malaysian palm oil products for Dec 1-10 fell 4.6 percent to 436,633 tonnes cargo surveyor Societe Generale de Surveillance added. Malaysia is the world's second largest palm oil producer after Indonesia.
The monsoon season in top Southeast Asian producing countries was also helping to support prices, investors said. On Monday, the state weather agency of top palm producer Indonesia warned of floods in top producing regions Kalimantan and Sumatra. Excessive rains can affect oil yield quality and force palm oil firms to sell the edible oil at a discount. So far, however, planters have not reported major logistical disruptions.