Palm oil bounces from year low on bargain hunting

KUALA LUMPUR: Malaysian palm oil futures bounced up from their lowest level in a year on Thursday as bargain hunters resurfaced amid market expectations policymakers will take adequate steps to prevent the euro zone debt crisis from spreading.

Short sellers, led by a major Singapore-listed planter with assets in Asia, had earlier pushed the market lower. Traders said the company later came out to openly buy from the physical market.

"Finally, the bounce has come. The short selling could not be sustained and now it is time to bargain hunt," said a trader with a foreign commodities brokerage.

The benchmark December palm oil futures on the Bursa Malaysia Derivatives Exchange fell 1.1 percent to 2,754 ringgit ($864), the lowest since Oct. 8 last year. It later settled up 0.8 percent to 2,808 ringgit.

Overall traded volumes stood at 34,535 lots of 25 tonnes each from the usual 25,000 lots.

Palm oil prices, which have lost more than a quarter of their value so far this year, have also been weakened by expectations of high stocks and concerns that demand will lose steam after India ends its festival season this month.

Traders are expecting exports for the first ten days of October to show a strong rise on last-minute buying from India and China. Cargo surveyors Intertek Testing Services and Societe Generale are due to issue export data on Monday.

Other financial markets rose on Thursday, as optimism grew over Europe's efforts to support its financial sector and risk aversion eased after an intensive sell-off earlier this week.

Brent crude rose above $103, limiting losses in other vegetable oils that are used as a feedstock for biofuel.

US soyoil for October delivery rose nearly 1 percent in Asian trade, also on bargain hunting.

China's vegetable oil markets were shut for a week for the national day holiday.

Copyright Reuters, 2011