Malaysian palm oil futures saw a sharp rise in late trade on Tuesday, due to traders short covering and speculation of buying from China. The benchmark December palm oil contract on the Bursa Malaysia Derivatives Exchange closed up 2.9 percent at 2,320 ringgit ($555.42) a tonne. "The market went up on rumours that China is going to replenish their edible oil stocks," said a trader based in Kuala Lumpur. "That news, added with massive short covering, was the reason behind the sudden spurt."
Traded volume stood at 53,675 lots of 25 tonnes each, well above the average 35,000 lots usually traded in a day. Palm prices saw a sharp dip last week on a stronger ringgit, going from near 15-month highs of 2,444 ringgit to two-and-a-half week lows of 2,216 ringgit. A bullish target at 2,349 ringgit per tonne has been aborted for palm oil, as it failed to break a resistance at 2,283 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao. In other vegetable oil markets, both the US December soyoil contract and the January soybean oil contract on the Dalian Commodity Exchange rose 1.2 percent.
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