Palm rebounds from 1-month low on hopes of more exports

KUALA LUMPUR: Malaysian palm oil futures rebounded from a one-month low hit in the previous session, lifted by expectations of rising exports, but traders expect the market to resume its downtrend on a stronger ringgit and weaker related edible oils.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 0.2 percent at 2,509 ringgit ($587.04) a tonne at the midday break, set to snap three consecutive sessions of losses.

Traded volumes stood at 26,781 lots of 25 tonnes each at the midday break.

"The market is up on export prospects, but once the data is out, selling pressure will resume," said a Kuala Lumpur based futures trader, referring to export data from cargo surveyor Intertek Testing Services (ITS).

Palm oil shipments from Malaysia, the world's second largest producer after Indonesia, showed a 16 percent rise for the full month of May versus April, led by rising exports to India, according to data from ITS that came in during the market's midday break.

Palm oil buyers had stocked up on purchases during the month of May, ahead of the Muslim fasting month of Ramadan which began on Saturday.

The event sees Muslims in regions such as India, Pakistan and the Middle East, break day-long fasts with communal feasting, incurring higher usage of palm oil for cooking.

The trader added that related edible oils on China's Dalian Commodity Exchange and the Chicago Board of Trade, combined with a stronger ringgit, were factors weighing on palm prices.

A stronger ringgit, palm's traded currency, typically weighs on palm's prices as it makes the tropical oil more expensive for holders of foreign currencies. It was last up 0.2 percent at 4.2740 against the dollar.

Palm oil prices are also impacted by soyoil prices, as they compete for a share in the global vegetable oils market.

Soybean oil on the Chicago Board of Trade was down 0.2 percent, while the September soybean oil contract on the Dalian Commodity Exchange was down 2.4 percent.

The September contract for palm olein declined 2.3 percent.

The palm oil August contract may bounce moderately to a resistance at 2,523 ringgit per tonne before falling again, according to Reuters market analyst for commodities and energy technicals Wang Tao.