Malaysian crude palm oil futures were up on Thursday, tailing a rally in the US soyoil. But dealers said prices could be under pressure in the near term as plantation groups expect both production and stocks of palm oil to rise in July over June.
The benchmark contract breached the 1,370 ringgit a tonne level as players bought on the rise in Chicago soyoil futures. But gains beyond the key psychological level of 1,400 ringgit a tonne may be difficult given concerns over crop and supply, dealers said.
"Whatever estimates we have so far don't suggest that the market can be fundamentally supported at above 1,400 ringgit," said a trader.
A Reuters survey on Thursday showed output of palm oil in Malaysia, the world's top producer, could be 3.5 percent higher in July than June as crops begin a fresh ascent in yield.
Exports could dip 14.45 percent, while stocks may rise 8.59 percent [nKLR274017].
At Thursday's close, the benchmark third-month palm oil contract on Bursa Malaysia Derivatives, October, ended up 15 ringgit, or 1.1 percent, at the day's high of 1,378 ringgit ($367.42) a tonne.
Other traded months closed up 7 to 14 ringgit. Volume was average at 3,514 lots of 25 tonnes each. Much of the trade and gains took place just before the close as short covering activity emerged. Dealers also attributed the positive close to influence from a strong US soyoil.
Soyoil futures on August soyoil on the Chicago Board of Trade rose as much as 0.19 cent a lb in Thursday's electronic trade, extending Wednesday's rally notched on the back on fresh weather woes in US soybean growing areas.
The CBOT's electronic session commences during Asian market hours and ahead of formal trading in Chicago, which begins at 1400 GMT.
In physical dealings of crude palm oil on Thursday, the combined months of July and August saw trades at 1,367.50-1,372.50 ringgit a tonne in the southern and central regions of Malaysia.
Offers were seen at 1,377.50 ringgit and bids at 1,372.50.
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