Palm Futures Edge Down, Off 8-Week Low

CRUDE palm oil futures ended slightly lower yesterday, recouping
most of the day’s 2.2 per cent loss as investors moved to cover their

short positions in an oversold market, traders said.

“The idea

that the market was technically terribly oversold brought back good

short-covering interest,” said a trader with a Kuala Lumpur-based

brokerage.

The tropical oil hit an eight-week low in early

trade, extending a 5.3 per cent fall from last week as the market was

dragged down by weaker crude oil and rival soy prices.


The benchmark April contract on the Bursa Malaysia

Derivatives Exchange settled down RM5, or 0.2 per cent, at RM2,490,

after tumbling as low as RM2,439, the lowest intraday level since Nov.

24.

Overall volume shot up to 21,638 lots of 25 tonnes each compared to the usual 10,000 lots.

Oil fell for the sixth consecutive session to below US$78 (US$1.00 =

RM3.34) a barrel yesterday, as renewed concerns over energy demand and

the outlook for economic growth prompted investors to sell positions.

“I think the market is undergoing a corrective rebound.

Rumours that Jan.1-15 (palm oil) production was down double-digits added to the strength,” another trader said.

Stronger exports and a dip in products are key to bringing down palm

oil stock in the world’s number 2 grower from a 13-month high in

December. Palm oil prices normally correlate inversely with palm oil

stocks.

Traders are also cautiously awaiting the midweek

release of Jan. 1-20 palm oil exports estimates by cargo surveyors for

fresh clues on fundamental strength.

In the physical market,

palm oil for January delivery was traded at RM2,440-RM2,470 per tonne

in the southern and central regions.

Source : Business Times

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