Palm rebounds from 5-mth low, but headed for 14.5% qtrly drop

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KUALA LUMPUR (March 31): Malaysian palm oil futures rebounded on Friday from a more than five-month low hit the previous day as stronger export outlook and a weaker ringgit lent support, but the contract was headed for a 14.5% drop on the quarter.

Benchmark palm oil futures for June delivery on the Bursa Malaysia Derivatives Exchange rose 1% at RM2,685 (US$606.92) a tonne at the midday break, but declined 3.5% for the week. The contract was in line for third gain in four sessions.

Traded volumes stood at 16,408 lots of 25 tonnes each at noon.

"The ringgit weakened today, and the market was technically oversold," said a futures trader from Kuala Lumpur, referring to a sharp decline in the previous trading session, when it fell to a more than five-month low of RM2,656.

A weaker ringgit typically makes palm oil cheaper for buyers holding foreign currencies. It fell 0.1% against the US dollar on Monday around noon, hitting its weakest in a week.

"Talk that exports can be good in April also encouraged covering on dips," the trader said.

Palm oil shipments from Malaysia, the world's no.2 producer of the tropical oil, rose 6.8% for the full month of March versus the previous month, data from cargo surveyor Intertek Testing Services showed.

Demand for palm oil is expected to rise in April, as buyers stock up ahead of Ramadan, the Muslim festival at the end of May, marked by month-long fasting in regions such as India and the Middle East.

The festival results in higher palm oil consumption for cooking purposes, as Muslims break their fasts daily with feasts.

In other related edible oils, soybean oil on the Chicago Board of Trade slipped 0.1%, while the September soybean oil contract on the Dalian Commodity Exchange declined as much as 0.9%.

The September contract for palm olein on the Dalian Commodity Exchange was down 0.3%.

Palm, soy and crude oil prices at 0556 GMT

Contract          Month    Last  Change     Low    High  Volume
MY PALM OIL       APR7     2851  +20.00    2825    2851      48
MY PALM OIL       MAY7     2776  +36.00    2758    2780     950
MY PALM OIL       JUN7     2685  +26.00    2671    2690    8351
CHINA PALM OLEIN  SEP7     5376  -18.00    5308    5388  221012
CHINA SOYOIL      SEP7     6094  -60.00    6076    6144  237636
CBOT SOY OIL      MAY7    31.96   -0.05   31.87   32.11    3281
INDIA PALM OIL    MAR7   538.60   +0.10  538.60     539     187
INDIA SOYOIL      APR7    637.8   +0.30  637.65   639.4    1620
NYMEX CRUDE       MAY7    50.11   -0.24   50.08   50.37   18845

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 = RM4.4240)
(US$1 = 64.8350 Indian rupees)
(US$1 = 6.8968 Chinese yuan)