Malaysian crude palm oil futures edged 0.8 percent higher on Thursday as strong buying after sharp decline supported the market. But gains were muted by concerns over falling exports and increased production, dealers said.
The benchmark third-month August contract on the Bursar Malaysia Derivatives Exchange settled up 18 ringgit or 0.8 percent to 2,368 Malaysian ringgit ($683) a tonne after hitting a session high of 2,411 ringgit. "Players are buying into the market since it has been oversold during the last two trading days," said a leading trader. "But there are expectations that prices could go lower because production is increasing faster than demand."
Traders said exports for the first 15 days in June, to be announced by cargo surveyors on Friday, are expected to be around 508,000 tonnes, about 20 percent lower than the first half of May. Malaysia's crude palm oil output rose 6.71 percent to 1,201,255 tonnes in May from 1,125,726 tonnes in April, official crop agency Malaysian Palm Oil Board said.
Other traded months rose between 5 and 27 ringgit. Overall trade rose to 15,016 lots of 25 tonnes from around 12,000 lots that change hands on a routine day. September palm oil on Singapore's Joint Asian Derivatives Exchange (JADE) climbed $12.50 to $666.50 a tonne.
Dealers said comments by leading analyst Dorab Mistry helped the market to stabilise and trade within a range after it lost about 17 percent since touching a peak of 2,764 ringgit last week. Mistry, a director at Godrej International Limited, said on Wednesday palm oil prices were expected to trade between 2,200 and 2,400 ringgit over the next month.
"Doral's comments are somewhat stabilising the market, people are playing within that range now," said another dealer. Exports of Malaysian palm oil products for June 1 to 10 fell 27 percent to 339,117 tonnes from 463,865 shipped between May 1 and 10, Interlake Testing Services said.
In Malaysia's physical market, crude palm oil for June shipment was quoted at 2,500/2,520 ringgit a tonne. Trades were done between 2,450 and 2,500 ringgit.
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