SINGAPORE: Malaysian crude palm oil futures eased on Tuesday as investors turned sceptical ahead of a European leaders summit later this week that looks unlikely to present concrete measures to solve the region's debt crisis.
There was still support in the market after prices rose 2.6 percent on Monday on concerns hot and dry weather in the US could damage soybean crop and limit edible oil supply. Rising Malaysian palm oil exports also added to the bullish sentiment.
"Market is trading in a tight range today, indicating traders were cautious and chose to stay at the sidelines ahead of the EU summit later in the week," said a dealer with a foreign commodities brokerage in Malaysia.
"But the bullish sentiment is still there. Bargain hunting may come in as discount to soybean oil is still huge," the dealer added.
By the midday break, benchmark September palm oil futures on the Bursa Malaysia Derivatives Exchange edged down 0.2 percent to 3,023 ringgit ($947) per tonne.
Traded volumes were thin at 6,041 lots of 25 tonnes each, compared to the usual 12,500 lots.
Malaysian palm oil exports grew 4.4 percent to 1.2 million tonnes in the first 25 days of the month from a month ago, said cargo surveyor Intertek Testing Services, backed by higher shipment to China, India and Pakistan.
Another cargo surveyor Societe Generale de Surveillance said on late Monday that exports rose 8.8 percent, supporting views that demand is supported by last-minute buying ahead of the Muslim fasting month starting in end-July.
Hot and dry weather in the US continued to threaten to damage soybean crops and could possibly lead to a smaller supply of soybean oil, raising appeal of palm oil that is already trading at a steep discount.
Brent crude held steady above $91 per barrel on Tuesday as short-covering and forecasts of a drop in US crude inventories offset worries that a European summit would be unable to produce a concrete solution to the region's debt crisis.
In other vegetable oil markets, US soyoil for July delivery lost 0.6 percent.
The most active January 2013 soyoil contract on Dalian commodity exchange also lost 0.9 percent, after touching a more than one-month high the previous day.
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