Palm oil steady as investors await key US data

JAKARTA: Malaysian palm oil futures traded steady on Thursday as risk-averse investors chose to sit on the sidelines ahead of a key plantings report in the United States due later.

The benchmark June crude palm oil contract on Bursa Malaysia Derivatives was 0.2 percent higher at 3,318 ringgit ($1,096) a tonne. Earlier, the contract briefly touched a one week high at 3,336 ringgit.

"Risk is off, that's what we're seeing across the board, with the market waiting for the USDA (data)," said Abah Ofon, an agricultural commodities analyst at Standard Chartered Bank.

"I'm looking for acreage to narrow, which is going to be bullish soybeans," he added. "That is going to be supportive for the entire oils complex, and supportive of palm oil."

The US plantings report due on Thursday may help reverse the market's declines this year.

A Reuters poll showed the US soybean area plantings for 2011 will be 76.870 million acres, down 534,000 acres from the 2010 figure.

As the end of the first quarter approaches, palm oil prices are on course for a 12 percent fall, having tracked other commodities lower as unrest in the Middle East and an earthquake in Japan sent investors scrambling for perceived safe-haven assets.

Higher palm oil output and the current dip in demand have pressured prices.

"The cash market is very slow, people are just waiting for what is going to happen tonight," said one trader, referring to the US data.

"This afternoon, maybe a little bit of a sell-off, but it won't go way up or down. People just want to square their positions, and cover."

Traded volume stood at 9,339 lots of 25 tonnes each, up from 19,561 lots on Wednesday.

In other data, exports of Malaysian palm oil products for March fell 0.5 percent to 1,105,440 tonnes from 1,110,672 tonnes shipped in February, cargo surveyor Intertek Testing Services said.

"It is expected to some degree but slightly less sluggish than I thought," Ofon said on the Malaysian data. "I don't expect output to increase substantially until the second half of the year."

Output is moving into a higher cycle from the first quarter of 2011 after two years of weak yields and erratic weather.

"I'm still bullish on palm oil ... But having said that, external influences are going to support prices going forward," Ofon added.

Technical charts show Malaysian palm oil could revisit its February high of 3,967 ringgit over the next three months, based on its wave pattern.

ICDX's June CPO futures contract was at 9,635 rupiah per kg, compared to 9,610 rupiah per kg when it opened. Market volume was 647 lots of 10 tonnes each.

In related markets, the most active September soyoil in China's Dalian Commodity Exchange was at 10,088 yuan versus 10,140 yuan at the open.

Brent crude rose 0.4 percent towards $116 on Thursday, heading for the biggest quarterly gain in almost two years as war, revolutions, and unrest across the Middle East and North Africa thrust supply constraints to the forefront of investor concerns.