Malaysian palm oil futures extended losses on Tuesday as some traders took profits on concerns that the market was overbought, although losses were limited by still-robust demand as indicated by export trends. Palm oil rallied to a 9-month high of 3,418 ringgit last Friday on an upbeat price outlook, and traders said the market was poised for a correction.
"Prices ended lower in unison with CBOT and technical-based selling. It looks like the much anticipated correction is taking place currently and once that is completed, prices will resume their uptrend," said a trader with a local brokerage in Malaysia.
Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange lost 0.2 percent to close at 3,366 ringgit ($1,093) per tonne, paring gains this year to 6 percent from a year-high 7.2 percent. Traded volumes on Tuesday stood at 28,255 lots of 25 tonnes each, higher than the usual 25,000 lots.
Palm oil faces a support at 3,343 ringgit per tonne and will rise to test resistance at 3,398 ringgit, said Reuters market analyst Wang Tao. Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance reported a 14 percent increase in Malaysian exports for the first 20 days of March, indicating that demand is still strong despite a slowdown compared to the first 15 days.
Market players are also paying close attention to a strike by Argentina's truckers to demand higher pay rates just as exporters were counting on them to haul freshly harvested soybeans to port. In other vegetable oil markets, the most active US soyoil contract for May delivery lost 1 percent in Asian trade while the most active September 2012 soyoil contract on China's Dalian Commodity exchange edged down 1.3 percent.