Malaysian palm oil futures made little headway on Tuesday, with the market split between rising vegetable oil supplies and strong demand expectations. Palm oil may come under further pressure as an improved US soy crop will lead to more crushing into soyoil - swelling global supplies at a time when palm oil stocks in Malaysia hit a 16-month high last month.
But strong demand as China restocks and Muslim countries snap up palm-based cooking oil cargoes ahead of Ramadan in August could limit losses. Traders are looking out for cargo surveyor reports on June 1-15 Malaysian palm oil exports. "The palm oil market is counting on exports. External markets are a little sluggish because the USDA report showed good crop numbers," said a trader with a foreign commodities brokerage in Malaysia, who pegged exports during the first fifteen days at 650,000 tonnes.
The benchmark August crude palm oil contract on Bursa Malaysia Derivatives Exchange fell 7 ringgit to 3,253 ringgit ($1,069.54) per tonne but staying well above one month lows of 3,199 ringgit hit the previous day. Overall traded volume fell to 21,936 lots of 25 tonnes each, from the usual 25,000 lots. US soyoil for July delivery inched up during Asian trade with some pressure coming on improved weather and better crop conditions.
The most active January 2012 soybean oil contract on the Dalian Commodity Exchange rose 0.3 percent in volatile trade after China reported a higher than expected inflation number for May. "The impact from the high inflation rate is minimal as the figure is lower than market expectations," said a trader with a foreign brokerage in Shanghai after the announcement. China's central bank raised bank reserve ratios on Tuesday for the ninth time since October to try to curb inflation.