Malaysian palm oil off one-month lows

Malaysian palm oil ended off one-month lows hit earlier on Monday as investors were worried that prices had overcooked the strong fundamentals in recent weeks. Palm oil rallied in recent weeks, driven by concerns that heavy rains have curbed Malaysian and Indonesian output and a dry spell may affect the Argentine soya crop.
On Jan 4, prices touched 3,905 ringgit, a peak not touched since March 2008. "There are no fresh factors around, the market has possibly been running ahead when it went to 3,905," said one trader in Malaysia. "I don't see many bearish factors at the moment.
"It is quite possible that the long (positions), who have been holding on for quite some time ... are now looking for fresh factors to re-enter the market." The benchmark April 2011 crude palm oil contract on Bursa Malaysia Derivatives fell as much as 0.7 percent to 3,618 ringgit ($1,183) per tonne, the lowest since December 22. It rose 0.2 percent at the close.
Overall, traded volume stood at 10,525 lots of 25 tonnes each, compared with 11,427 lots on Friday. Earlier, prices had peaked at 3,685 ringgit, supported by export data and expectations that demand from emerging markets would outpace supplies in the coming months.
"At the moment, the downside could be around 3,550, and the upside around 3,800 range," said another trader. "Anywhere above 3,800 will give the confidence for the market to go back to higher levels above 3,900." On Saturday, Exports of Malaysian palm oil products for January 1-15 rose 3.68 percent to 589,010 tonnes from 568,127 tonnes shipped during December 1-15, cargo surveyor Intertek Testing Services said.
"Exports are very good - the first 15 days of exports are up," said a third palm oil trader, adding that some in the market expected a fall in exports. Palm oil markets were little-affected by Friday's move by China's central bank to raise bank cash reserve requirements, the fourth time in just over two months, as the government moves to stem inflation. Eyes are now shifting to a flurry of data from Beijing due on Thursday, including December inflation and fourth-quarter economic growth, which might give clues on how much tightening would be needed in the next few months.
The most-active September 2011 soyaoil on the Dalian Commodity Exchange eased 0.6 percent to 10,520 yuan. "China soyaoil fell after hitting the highest level prompted by USDA crops report the previous week," said an oil analyst with a Shanghai brokerage. "It was further pressured by the Chinese central bank's move to raise lenders' required reserve on Friday, which indicate an expectation of interest rate hike in near future." In related markets, US crude for February delivery fell below $91, with trading subdued as markets in the United States enjoyed a long weekend due to Martin Luther King public holiday on Monday.