Malaysian palm oil futures ended higher on Friday, recouping losses, to post their first weekly gain since mid-March, helped by optimism that a recovery in demand and tighter stocks in the world's No 2 producer will underpin prices. Market participants are anticipating demand to trickle in from April as buyers begin to restock ahead of Ramazan and the Eidul-Fitr festival, which typically drive up consumption of the tropical oil.
The Islamic holy month starts late June this year. "Investors foresee that palm will have better demand in the coming months," said a trader with a foreign commodities brokerage in Kuala Lumpur. The benchmark June contract on the Bursa Malaysia Derivatives Exchange inched up about 1 percent to 2,659 ringgit ($811) per tonne by Friday's close. Benchmark palm prices are up 0.2 percent this week, taking a breather after falling every week since mid-March.
Total traded volume stood at 35,650 lots of 25 tonnes, just above the average 35,000 lots. Technicals showed Malaysian palm oil is expected to retest a support at 2,613 ringgit, said Reuters market analyst Wang Tao. A break below that would lead to a further loss towards 2,519 ringgit per tonne, he said.
Investors will be watching out for a key industry report on Malaysia's end-stocks, output and exports in March that will be released next week. Despite sluggish demand from major consumers, India and China, Malaysian palm oil stocks are widely expected to fall from the 1.66 million tonnes at end-February.
A Reuters poll of six planters and traders pegged end-March stocks at 1.58 million tonnes, their lowest in more than three years, after the crop-damaging dry weather earlier this year continued to curb yields. In other competing vegetable oil markets, the US soyoil contract for May gained 1.0 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 1.2 percent.