Malaysian crude palm oil rebounded on Wednesday on bargain hunting after prices hit a five-week low earlier in the session, although gains were modest as investors remained worried that the euro zone debt crisis could hurt demand.
Market players also priced in weaker Malaysian exports for the July 1-25 period after cargo surveyor Intertek Testing Services reported a 14 percent monthly drop. "The market recovered today as it was a little bit oversold. Exports were down 14 percent but that has already been factored in considering the market dropped close to 200 ringgit in the last few days," said a trader with a foreign commodities brokerage in Malaysia.
The benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange edged up 0.9 percent to close at 2,951 ringgit ($930) per tonne. Prices earlier dropped to 2,898 ringgit, the lowest since June 18. Traded volume stood at 45,813 lots of 25 tonnes each, higher than the usual 25,000 lots.
On the technicals front, palm oil is expected to end its current rebound below a resistance at 2,970 ringgit, said Reuters market analyst Wang Tao. Palm oil futures were trading almost 3 percent lower so far this week on renewed concerns over the euro zone debt crisis and wet weather forecast in the US Midwest, where crops are withering due to the worst drought in decades.
In Malaysia, exports continued to show weakness from a month ago. In addition to the Intertek Testing Services data, cargo surveyor Societe Generale de Surveillance reported a steeper 18.6 percent monthly decline in exports for the July 1-25 period. In other vegetable oil markets, the most active US soyoil contract for December delivery was up 1.1 percent by 1005 GMT. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.8 percent lower.