Malaysian palm oil futures reversed earlier losses to end higher on Friday on last minute buying, although traders remained wary over the weak global economy and slowing export data. Buying surged in the last half hour of trading and some traders said this was due to the weak performance this week that prompted investors to close out their short positions to book profits.
Despite closing higher on Friday, palm oil still recorded a slight 0.3 percent weekly loss as investors were held back by disappointing jobless US data, while worries about the euro zone persisted despite a better-than-expected Spanish bond auction. "The buying came in the last half an hour (of trading), we saw an obvious trend that market will close higher, and all of us were a bit apprehensive of selling," said a trader with a foreign commodities brokerage in Malaysia.
"The market has come down for quite a while this week, so it could be those who are holding short positions just bought in to take profits." Benchmark July palm oil futures on the Bursa Malaysia Derivatives Exchange gained 0.7 percent to close at 3,500 ringgit ($1,143) per tonne.
Traded volumes stood at 29,436 lots of 25 tonnes each, higher than the usual 25,000 lots. Tight soybean supply in drought-hit South America remained a bullish factor for palm oil. On Thursday, Argentina's government cut its soy production estimates to more than 10 percent below last year's harvest levels.
On the demand side, cargo surveyor Intertek Testing Services said exports for April 1-20 fell 5.6 percent to 844,453 tonnes, in which exports for by-products such as refined palm stearin and palm fatty acid distillate were observably lower than a month ago. In other vegetable oil markets, the most active US soyoil contract for May gained 0.4 percent and the most active Dalian soyoil September contract was up 0.2 percent, lifted by strong Chinese demand for soybeans and supply concerns in South America.
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