Malaysian palm oil futures rebounded on Tuesday to snap four days of declines but remained not far off their lowest in almost six weeks as a big domestic crop, poor demand and weak competing oil prices put pressure on the edible oil. By the close, the benchmark April contract had gained 0.28 percent to 2,172 ringgit ($597) per tonne, after touching 2,151 ringgit in early trade, the contract's lowest point since December 19.
Traded volume stood at 50,050 lots of 25 tonnes, well above the typical 35,000 lots. "The bigger picture is still bearish but for the short term we see a long-awaited upward correction," said a trader with a foreign commodities firm in Kuala Lumpur. However, some traders doubted how high prices would go in the short term, with one suggesting they would likely hover around 2,200 ringgit over the next five days.
"Demand for palm is not that strong and competing products are also at low levels. Even though the ringgit is weak, buyers still have other options," said a second trader with a foreign commodities firm in Kuala Lumpur, adding that recent export data was pulling prices lower. A forecast record palm oil crop of 20.1 million tonnes by the world's second-biggest producer in 2015 coincides with expected record high production of soybeans in South America this year, and record output in the United States in 2014.
Malaysian exports of palm oil products fell 17.7 percent to 886,189 tonnes between January 1 and January 25 from the same period a month before, according to cargo surveyor Intertek Testing Services. Another cargo surveyor, Societe Generale de Surveillance, reported exports for the same period slid 19 percent. In other vegetable oil markets, the US soyoil contract for March gained 0.32 percent in Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange shed 0.76 percent.