KUALA LUMPUR: Malaysian palm oil futures came off near three-month lows to trade higher on Tuesday evening on concerns about a decline in February production, traders said.
According to details, market signals, however, were mixed earlier in the day as some forecast output gains while exports in February are expected to improve, traders said.
Benchmark palm oil futures for April delivery on the Bursa Malaysia Derivatives Exchange were up 0.4 percent at 3,049 ringgit ($685.48) a ton at the end of the trading day. Earlier in the session, they hit 3,011 ringgit, their lowest levels since Nov. 25, 2016.
A Kuala Lumpur-based trader said physical prices were still very strong, indicating that market supplies are still tight due to lower production levels.
Another trader added the market was supported by expectations of bullish export data from cargo surveyors for the first half of February.
“That coupled with technical buying since palm prices rebounded off lows” had aided the market, said the trader. Palm oil shipments in the first 10 days of February slipped up to 3 percent from the corresponding period in January, showed cargo surveyor data, as demand for the tropical oil waned after the Lunar New Year celebrations.
During the Lunar New Year celebrations, there is more demand for the tropical oil from top consumer China.
Output levels are still seeing the impact of the crop-damaging El Nino, but its effects are seen tapering off towards a bigger recovery by the second half of this year.
Production for January declined 13.4 percent to 1.28 million tons, its sharpest drop in a year, according to data from the Malaysian Palm Oil Board on Friday.
Palm oil may stabilize around a support at 3,014 ringgit per ton, and then rise towards a resistance at 3,089 ringgit, showed analysis by Wang Tao, a market analyst for commodities and energy technicals.
In other related edible oils, the March soybean oil contract on the Chicago Board of Trade rose 0.3 percent, while the May soybean oil contract on the Dalian Commodity Exchange fell 1.4 percent.
