Malaysian palm oil futures edged up on Thursday, recovering from the previous session's six-week low amid expectations of lower June production data and an uptick in Asian shares. Investors in the palm oil market are expecting the Malaysian Palm Oil Board (MPOB) to report on Friday a drop in the country's palm oil output and stockpiles in June from a month ago.
Malaysian palm oil stocks are forecast to drop 5.4 percent from a month ago to 2.12 million tonnes in June, according to a Reuters survey of five planters, traders and analysts. "Chicago soybeans have firmed and everyone is expecting MPOB numbers to show production and stocks declined in June," said one Kuala Lumpur-based trader. "But this is not a reversal, the market is likely to remain under pressure from external factors, China's economic conditions and demand could also slow down after Ramazan festival."
The September palm oil contract on the Bursa Malaysia Derivatives exchange gained 1.6 percent to 2,185 ringgit ($573.2) a tonne by the close. Traded volume for palm stood at 21,628 lots of 25 tonnes each, down from the daily average of 23,000 for 2015 so far.
Chicago soybean futures rose for a second session on Thursday, underpinned by fresh concerns that excessive rains could curb US production. Malaysian palm oil dropped to its lowest since late May on Wednesday as Chinese stocks tumbled and the Greek debt crisis continued to hammer markets. On the technical front, palm oil has found a support around 2,139 ringgit and is expected to bounce to 2,182 ringgit.
The support is provided by the 76.4 percent Fibonacci retracement on the uptrend from the April 29 low of 2,070 ringgit to the June 8 high of 2,362 ringgit, according to Wang Tao, a Reuters market analyst for commodities technicals. US soyoil was up, while the most-active soybean oil contract on the Dalian Commodity Exchange added 0.3 percent.