Malaysian palm oil futures rose on Tuesday after hitting a three-month low last week, but high stockpiles of the vegetable oil will likely continue to put pressure on prices. The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange rose 1.1 percent to 2,129 ringgit ($522.45) a tonne.
It extended a 1.8 percent gain on Monday after posting a third weekly loss last week. "Fundamentally, looking at demand, prices should still be under pressure. This is more of a technical rebound since I am not seeing big demand coming in," a palm trader in Kuala Lumpur said.
Palm was still targeting the 2,142 ringgit per tonne level, said Wang Tao, a Reuters market analyst for commodities and energy technicals. "The next resistance will be at 2,142 ringgit, a break above which could lead to a further gain to 2,190 ringgit," Tao said.
Another trader in Kuala Lumpur said buyers did not find the prices attractive enough to notably boost demand. "It is true that prices are low, but people believe there is still room for them to go down. There is enough oil and production is good," the trader said.
Stockpiles remain elevated and demand subdued, keeping prices in check, both traders said. A bumper harvest last year in Malaysia and Indonesia, the world's major producers, had flushed the market with palm oil and sent prices tumbling. Meanwhile, the two nations are battling European Union's plan to phase out the use of palm oil in renewable transport fuel by 2030.
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