Malaysian palm oil futures rose as much as 2.5 percent on Friday after sharp sell-off the previous day as investors snapped up bargains although concerns lingered over Middle East unrest slowing economic growth. Palm oil hit its lowest since November 29 on Thursday with traded volumes hitting a record high of 48,704 lots of 25 tonnes each on selling pressure from refiners and funds cutting positions.
The benchmark May crude palm oil futures climbed as much as 86 ringgit to 3,541 ringgit($1,155)before settling at 3,515 ringgit. Traded volume at the time stood at 29,810 lots of 25 tonnes each from the usual 15,000 lots. Traders said top palm oil buyers India and China might enter the market for supplies as prices are attractive and palm oil has reduced its premium to competing soyoil. But other investors said there could be more selling pressure in the days to come.
"After the sell-off investors are quite uncertain about the market tread. It is likely to content between 3,400 to 3,500 ringgit a tonne," said a trader with foreign brokerage. Reuters technical analyst Wang Tao said there was a bearish target for Malaysian palm oil based on its wave pattern at 3,275 ringgit per tonne.
Gains in palm oil prices were also capped by slower overseas demand, after cargo surveyor Intertek Testing Services reported 8.2 percent lower in palm oil exports during February 1 to 25 compared to the same period last month. Another cargo surveyor, Societe Generale de Surveillance said exports for the same period fell 6 percent. US soyoil for March delivery reversed losses to gain 1.1 percent in Asian trade hours, while the most traded September soyoil on China's Dalian Commodity Exchange rose 0.8 percent.
"Investors in oils and agricultural commodities need excuses to correct prices from time to time. For them, the unrest in Libya is a good chance to adjust prices," said Zhan Zhi Hong, an oil analyst with China Merchant Futures. "(China's) soyoil prices will remain stable, we foresee an upward trend by April, or probably end March."
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