Malaysian crude palm oil futures edged up in post-holiday trade on Wednesday as traders focused on dry south American weather affecting soy yields, although concerns of a looming Greek debt default curbed gains. Investors shifted their focus to the US Federal Reserve that is expected to keep interest rates at ultra-low levels at the end of a two-day meeting on Wednesday, potentially weakening the US dollar.
"The euro zone debt crisis casts a shadow on everything, but things are a bit peachy on the first day back after Chinese New Year," said a trader with a foreign commodities brokerage in Kuala Lumpur. Benchmark April palm oil futures on the Bursa Malaysia Derivatives Exchange settled up 0.1 percent at 3,169 Malaysian ringgit ($1,030) per tonne.
Traded volumes were thin after the long weekend at 9,267 lots of 25 tonnes each, versus the usual 25,000 lots. Reuters technical analyst Wang Tao said palm oil was expected to drop to 3,136 ringgit per tonne, as it could have completed a rebound from an hourly chart low of 3,103 ringgit. The Malaysian Meteorological Department did not issue any warnings for Wednesday, although traders are watching out for heavy rains and flash floods in parts of the southern state of Johor and Sabah, on the island of Borneo, which account for at least 60 percent of output.
Traders are expecting a more pronounced slowdown in Malaysian palm oil exports after the Lunar New holidays although China, the world's No 2 buyer of the tropical oil, may restock as inventory levels come down. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance is due to issue January 1-25 palm oil exports on Thursday. The US soyoil contract for March delivery inched down 0.2 percent after paring earlier gains on unfavourable south American crop weather. China's commodity markets are closed for Lunar New Year this week.
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