MALAYSIAN crude palm oil futures rose nearly 1 per cent yesterday, bouncing back from the lowest intraday level in nearly 10 weeks on late short-covering, traders said.
The upside was capped by the prospect of weak demand from key buyer China, which is needed to reduce inventories in the world’s number 2 producer, Malaysia, from a 13-month top in December.
“The bulls emerged to lift the market up again,” said a trader at a Kuala Lumpur-based commodities brokerage.
“Perhaps a supportive close after breaching RM2,400 is a good sign for the chart,” the trader added.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange rose RM22 to RM2,429 ringgit, after going as low as RM2,393, a level not seen since Nov. 20.
Traded volume shot up to 20,296 lots of 25 tonnes each, from the usual 10,000 lots.
“I guess after the market held well above RM2,400, there was some panic short-covering,” said another trader with an investment bank.
Palm oil has come under pressure in recent weeks, losing 11 per cent from a seven-month high of RM2,726 ringgit hit on Jan. 6.
It was partly dragged down by China, which implemented an increase in higher reserve requirements for some banks as ordered last week.
In the physical market, palm oil for January and February delivery was traded at RM2,425-RM2,430 per tonne in the southern and central regions.
Source : Business Times