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Palm rebounds from 11m low on short covering, crude
[JAKARTA] Volatile Malaysian palm oil futures retreated from 11-month lows on Tuesday, finishing higher while tracking crude oil prices and as traders covered short positions.
By the close, the benchmark palm oil contract for October on the Bursa Malaysia Derivatives Exchange was up 0.3 per cent at RM2,060 (US$534) a tonne.
"Bargain hunting and short-covering was seen at the new low levels," said a trader with a foreign commodities brokerage in Kuala Lumpur.
Palm prices fell as far as 2,026 ringgit, their lowest since Sept 11 last year, and have lost 3 per cent so far this month.
Traded volume stood at 53,767 lots of 25 tonnes each, well above the roughly 35,000 lots that usually trade in a single session.
An uncertain demand outlook, exacerbated by economic worries in top buyer China, had weighed on prices during most of Tuesday's session, with traders ignoring upside from a weak ringgit and the potential impact of dry weather spurred by El Nino.
In other vegetable oils, the US August soyoil contract eased 0.5 per cent in late Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange added 0.1 per cent.
Palm oil, used as cooking oil and to make a range of foodstuffs from instant noodles to margarines, as well as an additive in biodiesel, typically tracks soyoil, a common food and fuel substitute for palm.
Also helping turn palm positive, crude oil prices steadied at US$50 a barrel after a 5 per cent drop and badly bruised commodity and Chinese markets were calmer generally, as investors attempted to shake off recent turbulence.
Palm may fall into a range of RM1,997-RM2,031, driven by a powerful wave C, said Reuters market analyst Wang Tao.