SINGAPORE: Malaysian palm oil futures rose on Thursday, supported by an improved global economic outlook and a market correction after recording straight losses for more than five days.
Top central banks including the US Federal Reserve moved to tame a liquidity crunch for European banks by providing cheaper dollar funding, boosting prices of dollar-denominated commodities such as CBOT soybeans.
"The market is higher today tracking Dalian and CBOT. Signs that the European debt issue is stabilising also helped," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"Also, the palm oil market has been down for more than five days. It's mainly a retracement after a near 200-ringgit fall," he added. Palm oil hit a near three-week low of 3,011 ringgit on Wednesday.
By midday, benchmark February palm oil futures on the Bursa Malaysia Derivatives Exchange rose 1.8 percent to 3,073 ringgit ($970) per tonne.
Overall traded volumes stood at 8,091 lots of 25 tonnes each, lower than the usual 12,500 lots. Traders are expecting a slow week as industry players attend the Indonesia Palm Oil Conference and Price Outlook 2012, which started on Wednesday.
Industry analysts, including Dorab Mistry and James Fry, will present their views at the conference on Friday.
The Malaysia Meteorological Department issued a yellow stage warning that heavy rain may persist till Saturday and cause floods over low-lying areas in parts of Pahang -- a key oil palm growing area that accounts for 15 percent of production in Malaysia.
Heavy monsoon rains and a seasonal decline in yields are expected to lower Malaysia's November palm oil production. Industry sources expect December production to be lower as well.
But cargo surveyor data released on Wednesday showed exports have also started to come off a little, and this may provide relief to tightening stocks. Exports for November were 8.8 percent lower than a month ago, according to Intertek Testing Services.
In related markets, Brent crude traded above $110 for the third session on Thursday after the world's major central banks moved to tame a liquidity crunch for European banks, but concerns about slower demand capped prices and offset any gains due to Iran.
The joint intervention by central banks also lifted other vegetable oil markets. US soyoil for January delivery rose 0.8 percent while China's most active May 2012 soybean oil contract jumped 1.9 percent.
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