Crude Palm Oil Rebounds On Dip-Buying, Short Covering - PalmOil Hq

Crude palm oil futures on Malaysia’s derivatives exchange rebounded Tuesday on dip-buying and short covering after the market tumbled to the lowest level in more than four months.

Investors also ignored concerns that global economic recovery might slow due to the earthquake and tsunami that struck Japan, the world’s third-largest economy, last Friday.

The benchmark May contract on the Bursa Malaysia Derivatives ended MYR50 higher at MYR3,385 a metric ton, off an intraday high of MYR3,420/ton.

“Palm oil prices recouped losses later in the day following talks on flooding in the major palm oil producing state of Sabah that may delay harvesting progress,” said a trading executive at Kuala Lumpur-based OSK Investment Bank.

Still, gains in palm oil were capped by improving supply outlook, with traders estimating a 5%-10% increase in output at a time when export demand remains weak, as some purchasing countries may have been rationing demand in response to the recent high prices.

Cargo surveyor Intertek Agri Service estimated a 17% decline in shipments to 526,407 tons while SGS pegged March 1-15 exports at 520,463 tons, down 15% on month.

Palm oil prices have declined “to an attractive level, with some buyers locking in requirements. I expect to see more buying in the coming days if the market remains at MYR3,200-MYR3,400/ton,” said a trading executive in Mumbai.

The most active rupiah-denominated CPO contract for May on the Indonesia Commodity & Derivatives Exchange was last traded 2.7% higher at IDR9,925 a kilogram at 0954 GMT.

CME Group’s dollar-based palm oil contract for May was last traded $32 higher at $1,129/ton at 1000 GMT.

In the cash market, refined palm olein for July, August, September shipment was traded at $1,120/ton, free on board Malaysian ports.

April crude palm oil was also traded at $1,095/ton, FOB Indonesian ports, said a physical market broker in Indonesia.

Cash CPO for prompt shipment was offered MYR30 higher at MYR3,430/ton.