Malaysian palm oil futures rebounded on Tuesday, helped by lingering concerns over tight production, but gains were capped by data that showed export shipments fell in July.
The benchmark palm oil contract FCPOc3 for October delivery on the Bursa Malaysia Derivatives Exchange gained 65 ringgit, or 1.58%, to 4,185 ringgit ($991.24) a tonne by the midday break, after plunging 5.7% in the previous session.
The contract is recovering from Monday’s sell-off on concerns over tightness in production, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“Until and unless production improves, prices are expected to remain defensive,” he said.
The Southern Peninsula Palm Oil Millers’ Association on Monday estimated July production to climb 2% on the month, traders said.
But concerns over smaller-than-usual yields linger as plantations grapple with a labour shortage amid the seasonal higher production months.
Exports of Malaysian palm oil products for July fell 6.3% to 1.45 million tonnes from June, cargo surveyor Societe Generale de Surveillance said on Monday.
Dalian’s most-active soyoil contract DBYcv1 fell 1.3%, while its palm oil contract DCPcv1 slipped 1.4%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.02%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Refinitiv Agriculture Research on Monday said the contract is expected to decline towards support levels at 4,030-4,050 ringgit per tonne this week due to the weak fundamentals, with resistance at 4,230-4,250 ringgit per tonne.
Palm oil may test a support at 4,022 ringgit per tonne, a break below which could cause a fall to 3,875 ringgit, Reuters technical analyst Wang Tao said. TECH/C
Source: Reuters (Reporting by Mei Mei Chu; Editing by Ramakrishnan M.)