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
|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|
(US$1 = RM4.0740)