Palm futures up as output seen slowing; US debt eyed

Palm oil, which has lost 18 percent so far this year, has been choppy due to talks of higher output in top suppliers Indonesia and Malaysia as well as mounting concerns about US debt.

"Weather is still in play, any significant movement in grains futures and the global market is going to impact Malaysia palm oil," said a trader with foreign brokerage in Kuala Lumpur. "The market is looking for new leads."

By midday, the benchmark crude palm oil contract on Bursa Malaysia Derivatives rose 0.3 percent or 10 ringgit to 3,110 ringgit ($1,046.081) per tonne.

Overall traded volume was more than halved to 6,234 lots of 25 tonnes each from the usual 12,500 lots.

"Market is trading in technical range of 3,000 to 3,150 ringgit a tonne, it is expected to last until the end of fasting month," said another trader in Kuala Lumpur, referring to the Muslim holy month of fasting, Ramadan, next month.

Production in major producing countries is expected to start slowing during the one-month fasting observance starting from August. Output may slow down further as mostly Muslim estate workers take a break for a key holiday, Eid Al-Fitr.

"Except news on debt crisis there isn't much momentum pushing the palm oil market," the trader said.

US President Barack Obama on Monday called on divided congressional leaders to compromise and break a deadlock over raising the US debt limit that he said risked a "reckless" national default.

Prices of vegetable oils held steady by midday on Tuesday on the back of firmer crude oil.

Soyoil futures for August delivery on Chicago Board of Trade rebounded 0.2 percent in Asia trade hours after it ended lower due to improved weather in US Midwest and weaker crude oil the previous session.

In China, the most active May soyoil on Dalian Commodity Exchange barely moved in Asian hours.

Copyright Reuters, 2011