Malaysian palm oil bounces back

Malaysian palm oil bounced off fresh one-week lows on Wednesday on talk of production falling further this month as rains continue to batter estates. But investors continued to factor in favourable weather across Argentina's farming belt that may relieve soya and corn crops suffering from drought.
The benchmark April crude palm oil contract on Bursa Malaysia Derivatives ended down nearly 1 percent to 3,670 ringgit ($1,202) a tonne, after going as low as 3,622 ringgit - a level unseen since January 18. "There is a perception that the market was oversold. Also, there is talk that production could be at least 5 percent lower in January," said a trader with a foreign commodities brokerage.
Other traders pegged the production decline at between five and 10 percent for Malaysia as heavy rains stall harvesting and excessive moisture affects yield quality. India, the world's largest edible oil buyer, hiked interest rates for the seventh time since March on Tuesday, in a move to rein in inflation and halt persistently higher food prices. The country's decision drove down the 19-commodity Reuters Jefferies CRB index , a global benchmark for the asset class, 1.5 percent to its lowest level in 3 weeks.
A Reuters technical analysis showed palm oil might extend losses to 3,539 ringgit per tonne, based on its wave pattern and a Fibonacci retracement analysis. A Reuters survey showed palm oil prices to average 3,100 a tonne this year, marking a third straight year of gains as global vegetable oil supplies continue to shrink. Other vegetable oils were mixed in Asian trade hours. US soyaoil for March delivery edged higher after posting losses in the previous session.
The most traded September soyaoil on China's Dalian Commodity Exchange hit one-month lows. "Some investors are adjusting their positions before the Chinese New Year," said Liang Yong, an analyst with Galaxy Futures in Heilongjiang province. "Soyoil inventory build-up has been completed before the holiday but seasonally lower demand for soyameal and soyaoil after the new year may pressure prices."
Trading in China is slowing as investors have begun to pull out funds before the new year holiday from February 2 to February 8. Despite a broad sell-off in commodities, crude rose in Asian hours on a technical rebound ahead of a statement from the US Federal Reserve expected to reaffirm an improved economic outlook for the world's largest oil consumer while investors await weekly stocks data.