SINGAPORE: Palm oil futures inched up on Tuesday, as prices at 4-month lows the previous day attracted some buyers, although gains were limited by slowing export demand.
A preliminary reading on Tuesday showed manufacturing growth in China slowed in April, further weighing on riskier assets such as shares and some commodities after weaker-than-expected economic data last week triggered a sharp market sell-off.
But traders said palm oil prices drew some support from bargain-hunting activities after tumbling to a 4-month low the previous day on sluggish exports and bearish external factors.
“We see some bargain hunting today, but overall sentiment is still volatile especially on the macroeconomic front. Support remains at RM2,250,” said a trader with a foreign commodities brokerage in Kuala Lumpur.
By the mid-day break, the benchmark July contract on the Bursa Malaysia Derivatives Exchange had gained 1.4 per cent to RM2,287 per tonne. Prices fell to RM2,250 on Monday, a level not seen since December 14.
Total traded volumes stood at 13,353 lots of 25 tonnes each, slightly higher than the usual 12,500 lots.
Technical analysis showed palm oil is expected to consolidate in a range of RM2,249 to RM2,289 for one trading session before resuming its downtrend, Reuters market analyst Wang Tao said.
The flash HSBC Purchasing Managers’ Index fell to 50.5 in April from 51.6 the month before as new export orders shrank in China. The PMI’s 50-point level demarcates growth from contraction from the month before.
Malaysian palm oil exports for April 1-20 fell 6.4 per cent to 864,206 tonnes from 922,987 tonnes shipped during March 1-20, cargo surveyor Societe Generale de Surveillance said on Monday.
Sluggish exports could prevent end-stocks from easing below the psychological two-million-tonne mark, putting further pressure on palm oil prices. Inventory level fell to 2.17 million tonnes in March, an 11 per cent decline from February’s 2.44 million tonnes.
In other markets, Brent crude slipped towards US$100 a barrel on Tuesday after manufacturing data from China pointed to a lukewarm recovery in the second quarter, denting the outlook for fuel demand in the world’s second-largest oil consumer.
In other vegetable oil markets, US soyoil for July delivery edged up 0.1 per cent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange fell 0.8 per cent.– Reuters
Source : Business Times