Malaysian palm oil up

Malaysian palm oil futures ended off three-week lows on Tuesday on short-covering although lingering worries over slower overseas demand due to large soybean crop harvest in South America continued to weigh. The benchmark July crude palm oil contract on Bursa Malaysia Derivatives rose 0.3 percent to 3,255 ringgit ($1,076.567) per tonne. It earlier hit its lowest level since March 24 of 3,212 ringgit.
Traded volumes stood at 25,047 lots of 25 tonnes each, compared to the usual 25,000 lots. "With the concerns of raising interest rates, supply build up, low demand and fund liquidation we've to acknowledge the market was terribly oversold," said a trader in Kuala Lumpur. "This explains the rally at the close, suggesting widespread profit taking, although there were expectations that overseas demand will be lower."
Traders forecast Malaysian palm oil exports during April 1-20 to fall 15-18 percent, a day before cargo surveyors Intertek Testing Services and Societe Generale de Surveillance unveil the key exports data. "South America will produce bumper soybean crops soon, eventually top buyers will slow down palm oil import," said the same trader in Kuala Lumpur.
The harvest of Brazil's record 70.56 million-tonne soybean crop picked up over the past week as the grain belt dried out, grains analysts Celeres said on Monday. A Reuters analysis set a bearish target of 3,163 ringgit per tonne for Malaysian palm oil based on a Fibonacci retracement analysis. Other vegetable oils fell as competing crude dropped on weaker economic outlook after S&P revised its US credit rating a day earlier and analysts said high oil prices could curb demand growth.
US May soyoil contract inched down in Asian trade hours. In China, the most active January 2012 contract on the Dalian Commodity Exchange fell 0.3 percent after Chinese buyers deferred soy cargoes for delivery in June and July. The cancellations came due to negative margins as Beijing has agreed to release 3 million tonnes of state soy reserves to help tame food inflation. "Imports of soyoil will definitely slow down," said Zhang Juan Cong, an oil analyst with Dadi Futures in China's southern city of Hangzhou.