SINGAPORE: Malaysian palm oil futures ended slightly lower after hitting a near two-week high on Tuesday as fears over the bird flu outbreak in China and its impact on soybean prices outweighed hopes for lower palm inventory in the Southeast Asian nation, the world’s No.2 producer.
Industry regulator, the Malaysian Palm Oil Board (MPOB), will on Wednesday report stock levels for March, with a Reuters poll predicting a drop to 2.35 million tonnes from 2.44 million in February.
“The rise in Dalian palm and soy and also the overnight gain in U.S. soy are helping the rally, while traders are also positioning ahead of MPOB data,” said Ker Chung Yang, investment analyst with Phillip Futures in Singapore.
“But the rise may be capped due to the bird flu situation in China.”
Traders are keeping a close watch on the development of a new strain of bird flu in China, fearing that it could cut demand for soy used in animal feed in the world’s top importer of the bean, although the World Health Organization said it was no cause for panic.
Soyoil is a close competitor of palm oil and a fall in soy prices could wean away demand from palm.
The benchmark June contract on the Bursa Malaysia Derivatives Exchange closed 0.2 percent lower at 2,395 ringgit ($789) per tonne. Prices earlier touched a high of 2,419 ringgit, a level last seen on March 28.
Total traded volumes stood at 29,311 lots of 25 tonnes each, compared to the average 35,000 lots seen so far this year.
Technicals showed palm oil is expected to rise to 2,440 ringgit, as indicated by a high-low bottom and a Fibonacci retracement analysis, said Reuters market analyst Wang Tao.
Market participants are also looking out for Malaysian palm export data for the first 10 days of April, due on Wednesday.
Shipments edged slightly higher for March, the first increase in four months, thanks to higher demand for refined products. In other markets, Brent crude oil rose above $105 per barrel on Tuesday, rallying from an eight-month low after China’s inflation slowed, giving it room to keep monetary policy easy and support oil demand in the world’s second-biggest consumer. In vegetable oil markets, U.S. soyoil for May delivery inched up 0.1 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodities Exchange closed 0.5 percent higher. – Reuters
Source : The Star