KUALA LUMPUR: Malaysian palm oil futures rose 1.2 percent on Wednesday on market views for a smaller US soy acreage this year that could lead to less competing soyoil and kick in more demand for the tropical oil.
Palm oil traders are waiting for the US plantings report due on Thursday, which may help reverse the market's 13 percent decline so far this year. Higher palm oil output and the current dip in demand has pressured prices.
"Local sentiment is getting driven by overseas markets. The planting of soybeans is very important to palm oil market," said a trader with foreign brokerage in Kuala Lumpur.
By midday, the benchmark June crude palm oil contract on Bursa Malaysian Derivatives rose 38 ringgit to 3,290 ringgit ($1,086) per tonne. Overall trade stood at 8,208, up from the usual 7,500 lots of 25 tonnes each.
Technicals are turning positive. A Reuters technical view showed Malaysian palm oil could revisit its Feb. high at 3,967 ringgit over the next three months, based on its wave pattern.
But palm oil's Malaysian fundamentals remain bearish. Output is moving into a higher cycle from the first quarter of this year after two years of weak yields and erratic weather.
"Market sentiment is still bearish due to good supply expectations for this month... It can be more than 20 percent (rise)," said another trader.
Cargo surveyors are due to issue Malaysia's March exports on Thursday and traders expect volumes to reach 1.15 million, a tad higher than 1.1 million tonne levels seen in February and hastening a build up in inventories.
Lower crude oil limited gains for other vegetable oils markets.
U.S soyoil for May delivery barely moved in Asian hours on investor caution ahead of the US plantings report. The most active Sept. 2011 soyoil in China's Dalian Commodity Exchange rose over one percent.
A Reuters poll earlier showed that the US soybean area plantings for 2011 will be 76.870 million acres, down 534,000 acres from the 2010 acreage.
On Tuesday, Hamburg-based oilseeds analysts Oil World said China's October 2010/September 2011 soybean imports are likely to reach 55.8 million as its economic growth fuels demand. The upbeat forecast could drive up palm oil prices, traders said.
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