SINGAPORE: Malaysian crude palm oil edged lower in tight-range trading on Wednesday, as caution prevailed on views that stocks of the edible oil will recover in July.
Malaysia's palm oil stocks could climb in July to their highest since February as exports slow and production rises, snapping four straight months of declines, a Reuters survey showed on Wednesday.
Industry regulator Malaysian Palm Oil Board (MPOB) will release official stocks and output data on Friday.
"Traders are nervous in the current phase and funds have built massive long position in grains," said a dealer with a local commodities brokerage in Malaysia. "Fundamentals are not looking good with higher output and tepid demand."
By the midday break, the benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange had lost 0.1 percent to 2,903 ringgit ($936) per tonne. Prices earlier touched a low at 2,894 ringgit, a level last seen on July 27.
Total traded volume came in at 6,795 lots of 25 tonnes each, compared to the usual 12,500 lots, as cautious sentiment dominated the market.
For the week, investors are awaiting other key figures that include a monthly supply and demand report from the US Department of Agriculture (USDA) that could provide some clues on soybean production trends and the extent of drought damage.
A tighter supply of soybeans to be converted into soybean oil could shift vegetable oil demand to the cheaper palm oil.
Market participants are also looking out for the Malaysian palm oil export data for the first 10 days of August due on Friday, especially after a dismal showing in July.
Despite poor fundamentals, losses were capped for palm oil futures as optimism that the world's largest economies -- the United States, China and the European Union -- will implement more measures to stimulate global growth increased appetite for riskier assets.
Oil futures dipped on Wednesday from a 12-week top hit in the previous session, but supply concerns and macroeconomic hopes kept prices above $111 per barrel.
In other vegetable oil markets, by 0536 GMT, the most active US soyoil contract for December delivery had edged up 0.4 percent and the most active January 2013 soyoil contract on the Dalian Commodity Exchange had lost 0.4 percent.
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