Palm oil ended off three-month lows on Thursday with other vegetable oil markets limiting losses on surging crude oil although concerns lingered over Libyan unrest spreading and slowing economic growth. Palm oil hit its lowest since November 29 with much of the selling pressure coming from refiners and funds cutting positions.
Traders said palm oil's high premium to soyoil narrowed to about $10 from $70, which may attract demand from price sensitive India and China - the world's top two buyers of the vegetable oil. "Palm oil trading is too volatile for these two days, it's difficult to predict its direction," said a trader in Kuala Lumpur, adding that palm oil exports data due on Friday could set market direction.
The benchmark May crude palm oil contract on the Bursa Malaysia Derivatives Exchange dived 5.1 percent to 3,336 ringgit ($1,095) before settling much higher at 3,457 ringgit per tonne. Traded volumes surged to 48,704 lots of 25 tonnes each, more than triple of the usual 15,000 lots seen at the close.
The sell-off later spread to other vegetable oil markets but US soyoil later traded more than 1 percent lower and China's most active September 2011 soybean oil contract ended down with $100 crude oil limited losses. Unrest in Libya and the threat of contagion to other oil producing countries in the region drove Brent crude above $119 a barrel on Thursday and the sell-off in other commodities eased as buyers snapped up bargains.
Malaysian traders said the sell-off in palm oil was triggered by a big refiner who sold at least 100,000 tonnes of physical oil on Wednesday to various Asian buyers. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will issue February 1-25 Malaysian palm oil exports on Friday. Separately, Thai state-buying agency Public Warehouse Organisation (PWO) has bought 30,000 tonnes of palm olein from Singapore-based trading house Wilmar for prompt shipment to tackle a domestic shortage.
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