Palm oil rebounds on expectations of positive data

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KUALA LUMPUR (Feb 6): Malaysian palm oil futures edged up in the first-half session on Monday buoyed by expectations that data due this week will show a rise in export demand, while production remains weak.

Benchmark palm oil futures for April delivery on the Bursa Malaysia Derivatives Exchange was up 0.23% at RM3,062 (US$692.45) per tonne at the mid-day break. Traded volumes stood at 16,725 lots of 25 tonnes each.

A Kuala Lumpur-based trader said palm was inching upwards, but is expected to trade range-bound towards RM3,100, in anticipation of positive data for Feb 1-Feb 10.

"There are some incoming reports this week on production and exports that would be supportive to the market. Dalian has not dropped a lot either," the trader added.    

"Market is short-term bullish and long-term bearish on palm. (Short-term view is positive as) production has fallen, and with India's monetisation issues being resolved, market is expecting the country to start importing more palm," he added.

Southern Peninsula Palm Oil Millers' Association (SPPOMA) released data last week showing a drop of 21.8% in production for January.

Palm output is expected to increase from March onwards, which will drag down the prices, analysts said at an event in India last Friday.

Leading industry analyst Dorab Mistry said palm oil prices could fall to RM2,500 per tonne in June or July in a "knee-jerk reaction at the first signal of rising production, possibly in early or mid-March."

Analyst James Fry's forecast for palm prices echoed Mistry's thoughts as well.

On the Chicago Board Of Trade, the March soybean oil contract gained 0.83%.

The May contract for Dalian soybean oil slipped 0.09%, while the palm olein contract slid 0.29%.

Palm, soy and crude oil prices at 0502 GMT

Contract                     Month      Last    Change         Low       High       Volume
MY PALM OIL   FEB7          3245     -5.00        3229       3247           20
MY PALM OIL  MAR7          3142     +2.00        3120       3144          673
MY PALM OIL  APR7          3062     +7.00        3032       3062         9040
CHINA PALM OLEIN  MAY7          6152    -18.00        6118       6170       266504
CHINA SOYOIL MAY7          6878     -6.00        6842       6910       269594
CBOT SOY OIL  MAR7         34.17     +2.70       33.91       34.2         4420
INDIA PALM OIL   FEB7        579.40     +2.70      577.50      579.4           80
INDIA SOYOIL FEB7        703.05     +2.60       701.5     717.85         1440
NYMEX CRUDE MAR7         54.01     +0.18       53.79      54.05        11787

(US$1 = RM4.4220)
(US$1 = 67.22 Indian rupees)
(US$1 = 6.8577 Chinese yuan)