Palm reverses losses, gains tracking related edible oils

KUALA LUMPUR: Malaysian palm oil futures rose in early trade on Tuesday, reversing losses from the previous session, supported by strength in related edible oils.

The benchmark palm oil contract for October delivery  on the Bursa Malaysia Derivatives Exchange was up 0.6 percent to 2,590 ringgit ($604.86) at the midday break, its strongest gain in a week so far.

Palm hit a two-week low in the previous session, touching an intraday low of 2,572 ringgit.

Traded volumes stood at 14,582 lots of 25 tonnes each at noon.

"Palm oil is tracking gains in US and Dalian soyoil, and there is some short-covering on a previously oversold market," said a trader from Kuala Lumpur, referring to gains in soyoil on the Chicago Board of Trade and China's Dalian Commodities Exchange.

"Production is seen picking up and rising stocks are expected in the next few months... But the supply and demand scenario is already factored into the market."

A Reuters poll of nine traders, planters and analysts forecast that Malaysian output in July will rise 11 percent to 1.68 million tonnes, leading to 6.5 percent rise in inventory levels to 1.63 million tonnes.

Exports are seen up 4 percent to 1.43 million tonnes.

Official data from the industry regulator, the Malaysian Palm Oil Board (MPOB), is scheduled for release on Thursday.

Palm oil production shows seasonal gains in the second half of the year, but uncertainty remains over the extent of palm's gains as trees are still seeing the lingering effects of a crop damaging El Nino.

The October soybean oil contract on the Chicago Board of Trade rose 0.5 percent, while the January soybean oil on the Dalian Commodity Exchange gained 0.4 percent.

In related oils, the January palm olein contract was down 0.3 percent.

Palm oil may slide more to 2,556 ringgit per tonne, said Reuters market analyst for commodities and energy technicals Wang Tao.