Palm oil rises from 3-month low, supply outlook caps gains

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SINGAPORE (Feb 20): Malaysian palm oil futuresticked higher on Monday as the market took a breather after dropping earlier in the session to a three-month low on pressure from expectations of higher production and slowing demand.

Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange gained 0.4% to RM2,871 (US$644.30) a tonne by the mid-day break. Earlier, the market hit a low RM2,849, the weakest since Nov 18.

Traded volumes stood at 28,591 lots of 25 tonnes each at the end of the morning session.

"There is not much direction for the market as Chicago is closed today," a Kuala Lumpur-based trader said.

"As far as fundamentals are concerned, it is pretty bearish as the output is rising everywhere, Indonesia and Malaysia. Soybean oil is priced competitively against palm oil, so it is getting difficult for palm oil to compete."

The Chicago Board of Trade soybean futures, which often direct movement in palm oil, were closed on Monday for the Presidents Day federal holiday.

In recent weeks, palm oil prices have reached their highest in more than four years as market supplies are tight on low production levels.

Palm's fresh fruit yields are still suffering the effects of a crop-damaging El Nino, but expectations of a recovery by the second-half of the year are weighing on prices, according to industry analysts.

Meanwhile, the demand is slipping.

Exports of Malaysian palm oil products for Feb 1-20 fell 0.8% to 733,288 tonnes from 739,367 tonnes shipped a month ago, cargo surveyor Intertek Testing Services said on Monday.

But the market may bounce to RM2,914 per tonne, as suggested by its wave pattern, a Fibonacci projection analysis and a falling channel, according to Wang Tao, Reuters market analyst for commodities and energy technicals.

China's Dalian palm olein slid 0.6%.

Palm, soy and crude oil prices at 0511 GMT

Contract        Month    Last   Change     Low    High  Volume
MY PALM OIL      MAR7    3110   +16.00    3092    3119     397
MY PALM OIL      APR7    2966   +15.00    2941    2974    6289
MY PALM OIL      MAY7    2871   +12.00    2849    2882   13210
CHINA PALM OLEIN MAY7    5940   -38.00    5888    5950  353244
CHINA SOYOIL     MAY7    6708   -44.00    6672    6716  201952
CBOT SOY OIL     MAR7   32.89    -0.20    0.00    0.00       0
INDIA PALM OIL   FEB7  558.80    -0.20  558.20  561.10     106
INDIA SOYOIL     FEB7  680.00    +1.50  679.00  680.00     740
NYMEX CRUDE      MAR7   53.45    +0.05   53.35   53.60    1313

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM4.456)