Palm oil bounces back from 16-month low on technical rebound

KUALA LUMPUR: Malaysian palm oil futures rose nearly 1 percent on Friday, bouncing back from a 16-month low hit in the previous session, on a technical rebound.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was up 0.9 percent at 2,475 ringgit ($606.02) at the midday break, heading for its first session of gain in three.

Palm oil hit its lowest since August 2016 on Thursday due to high inventories and low demand, and has shed 4.9 percent so far this month after declining 7.5 percent in November. It is down 0.16 percent this week after six consecutive weekly falls.

Trading volumes stood at 25,528 lots of 25 tonnes each at the midday break on Friday.

"The market is seeing a technical rebound after a sharp drop, it looks like yesterday it reached its bottom," said a futures trader from Kuala Lumpur.

"The market may start moving higher from now, as all negative factors are priced in."

Malaysian palm oil stocks at the end of November rose to 2.56 million tonnes, the highest since late 2015, while cargo surveyor data showed exports in the first half of December fell 9.6 percent from a month earlier.

The market is also up on news of lower export tax on crude palm oil, said another trader.

Malaysia said on Friday it will lower its crude palm oil export tax to 5.5 percent in January, from 6 percent in December.

Palm oil may break a resistance at 2,462 ringgit per tonne and rise towards the next resistance at 2,491 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.

In other related oils, the January soybean oil contract on the Chicago Board of Trade fell 0.1 percent, while the January soybean oil contract on the Dalian Commodity Exchange was down 0.7 percent.

The Dalian January palm olein contract dropped 0.4 percent.

Palm oil prices are affected by other edible oils as they compete for a share in the global vegetable oils market.