Malaysian palm oil futures ended lower on Friday, snapping a four-day winning streak, but prices remained near a five-week high as optimism stemming from a deal to solve Europe's debt problems checked losses. Eurozone leaders struck a deal with private banks and insurers on Thursday for them to accept a 50 percent loss on their Greek government bonds under a plan to lower Greece's debt burden and try to contain the region's crisis.
Benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange closed 0.3 percent lower at 2,971 Malaysian ringgit ($957) a tonne, after having earlier touched 2,999. In the previous session, prices hit 3,007, a level not seen since September 22. Traded volumes for the January palm contract stood at 14,173 lots of 25 tonnes each, compared with 13,281 lots on Thursday.
"A lot of profit-taking is going on, once prices hit the 3,000 level," said a Kuala Lumpur-based trader. "The longs will have to stay cautious for the time being. In a volatile trading session, palm prices slipped to a low at 2,958 ringgit, although prices have climbed around 3.1 percent this week and about 2.3 percent for the month. Palm oil sentiment is improving, despite the uncertain global economic outlook, due to lower production expectations as dominant Southeast Asian producers enter the rainy season.
A weaker version of La Nina may reappear this year and if the weather pattern develops at the end of this year, it could coincide with the rainy season in top palm oil producers Indonesia and Malaysia. "Obviously you've had a lot of supply come through in April-May," said Victor Thianpiriya, an agriculture commodity analyst at ANZ. Reuters technical analyst Wang Tao said palm oil faces a resistance at 3,014 ringgit per tonne, and only a break above it could open the way towards 3,087 ringgit. In comparable markets, US soyoil for December delivery slipped in Asian trade, while China's most active May 2012 soybean oil contract also eased.