Malaysian palm oil futures recovered losses to close mostly higher on Monday due to late covering and a rebound in the soyaoil market. By the close, the benchmark third-month crude palm oil on Bursar Malaysia Derivatives, August, settled seven ringgit higher at 1,380 ringgit ($363.16) a tonne. Overall volume was moderate at 5,366 lots. The August contract had fallen to a low of 1,364 ringgit just above a key support of 1,350 ringgit in afternoon trade as physical buyers retreated and demand slackened on weak refining margins.
But a rebound in soyaoil futures prevented further losses and players would closely watch the US soya markets for direction. The July soyaoil contract on the Chicago Board of Trade electronic trade was up 0.23 US cents at 22.97 cents per lb. CBOT soyaoil futures have been under pressure because of ample US soyaoil stocks. The US Department of Agriculture raised its US 2004/05 end oil stocks to 1.526 billion lbs. from 1.241 billion lbs.
Soya and palm oil compete for export destinations and their prices often move in step. "We saw some short covering because the market had dropped quite a lot," said one dealer in Kuala Lumpur. "There's no news to drive the market, so I guess we will be looking at Chicago for direction tomorrow," he said. The market's next leads will be the June 1-15 palm oil exports data due on Wednesday. In the physical crude palm oil market, the June/July contract was offered at 1,395 ringgit a tonne against bids of 1,390 ringgit in the southern region.
Deals were reported at 1,385 to 1,390 ringgits. The June/July contracts saw bids at 1,385 ringgit a tonne against offers at 1,390 ringgit in the central region.
PALM OIL FUTURES:
June (south): 1395.
Open/High/Low: 1369/1382/1364.
Previous closes: 1390.
PALM OIL PHYSICALS:
August (3rd month): 1380.
Previous settlement: 1373.
FUTURES:
Benchmark third-month August rose seven ringgit at 1,380 ringgit ($363.16) a tonne.
PHYSICALS: Firmed on late covering.