Palm oil edges higher, high stocks cap gains

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JAKARTA (March 19): Malaysian palm oil futures rose on Tuesday after hitting a three-month low last week, but a high stockpile of the vegetable oil will likely continue to pressure prices.

The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange rose 0.2% to RM2,109 (US$517.67) a tonne.

It extended a 1.8% gain on Monday after posting a third weekly loss last week, but prices were not attractive enough for buyers to notably boost demand, a trader in Kuala Lumpur said.

"It is true that prices are low, but people believe there is still room for them to go down. There is enough oil and production is good," the trader said.

Stockpiles remain elevated and demand subdued, keeping prices in check, the traded added.

A bumper harvest last year in both Malaysia and Indonesia, the world's major producers, had flushed the market with palm oil and sent prices tumbling.  

Meanwhile, the two nations are battling European Union's plan to phase out use of palm oil in renewable transport fuel by 2030.

Palm is still targeting the level of RM2,142 per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

"The next resistance will be at RM2,142, a break above which could lead to a further gain to RM2,190," Tao said.

Palm, soy and crude oil prices at 0511 GMT

Contract         Month    Last  Change      Low   High  Volume
MY PALM OIL      APR9     2033   +8.00     2018   2033     667
MY PALM OIL      MAY9     2072   +3.00     2057   2072    3567
MY PALM OIL      JUN9     2109   +4.00     2092   2109    9171
CBOT SOY OIL     MAY9    29.34   -0.10    29.32  29.51    1842
INDIA PALM OIL   MAR9   517.60   -0.30   516.80  518.5      50
INDIA SOYOIL     MAR9   764.05   +0.05   764.05  764.9     390
NYMEX CRUDE      APR9    59.06   -0.03    58.96  59.14    3903

(US$1 = RM4.0740)