Malaysian palm oil futures rebounded on Thursday from one-week lows hit the previous day, buoyed by global commodities markets and stronger demand ahead of Lunar New Year. Commodities rebounded forcefully on Wednesday from sharp losses the previous session as demand hopes and supply snags drove up oil, metals and crop prices.
"Malaysia palm oil tracked firmer overseas soyaoil, but there will be some short-covering going on before (Lunar) New Year," said a trader with foreign brokerage in Kuala Lumpur. "Production for this month might remain low, but overseas demand could recover after the festival."
The benchmark April crude palm oil contract on the Bursa Malaysia Derivatives exchange ended up 0.4 percent at 3,685 ringgit ($1,208) a tonne. Overall traded volume were 25,648 lots of 25 tonnes each, compared to the usual 15,500 lots. A Reuters technical analysis showed Malaysian palm oil will extend its rebound to 3,754 ringgit, based on a high-low bottom pattern and a Fibonacci retracement analysis.
Seasonal monsoon rains dragged Malaysian palm oil production to a five month lows the previous month and traders expect yields to fall further in the next two months as heavy rains affect output quality. But concerns over weaker production may be offset by possibility of a slower demand from China due to the Chinese government's move to freeze cooking oil prices for the first quarter.
Other vegetable oils mostly gained in Asian hours as concerns over grain supplies boosted the agriculture complex. US soyaoil for March delivery edged lower in Asian trade hours after gaining earlier in the day, while the most active September 2011 soyaoil contract on China's Dalian Commodity Exchange rose 1.2 percent.