KUALA LUMPUR, Feb 26: Malaysian palm oil futures fell on Tuesday as investors booked profits from a record rally on worries that funds had pushed the market too high, traders said.
But news of strong demand from India and China amid a possible supply squeeze in coming months kept the market buoyant, with gains this year at more than 24 per cent.
By the midday break, the benchmark May contract on the Bursa Malaysia Derivatives Exchange settled down 74 ringgit at 3,792 ringgit ($1,181) a ton, after going as low as 3,760 ringgit.
On Monday, the market surged nearly 6 per cent to a new high of 3,914 ringgit, the biggest absolute rise in a single day.
Bullish news about India and China buying has been supportive. But trading at these prices is just crazy and palm oil has just followed in the wake of profit taking in soyaoil. Other traded months fell between 67 and 88 ringgit.
China is looking to buy up to 300,000 tons of Indonesian palm oil for shipments until May, traders said on Tuesday.
James Fry, managing director of London-based LMC International, told Reuters on Monday that China would step up palm oil buying in coming months to ensure sufficient supplies for the domestic market ahead of the Olympic Games.
India too, is in the market to import up to 400,000 tons of palm oil and about 50,000 tons of soyaoil in the next three months as traders rush to take advantage of palm oil’s discount to soyaoil, an industry official said on Monday.
The Chinese and Indian buying frenzy will put pressure on palm oil supplies, leading industry analyst Dorab Mistry told Reuters on Monday. Dorab Mistry and James Fry, leading industry analysts, will speak at Bursa Malaysia’s annual palm oil conference from Feb 25 to Feb 27.
Exports of Malaysian palm oil products for February 1-25 rose 16.4 per cent to 913,062 tons from 784,439 tons in the same period in January, cargo surveyor Intertek Testing Services reported, while Societe Generale said exports rose 10.6 per cent to 903,375 tons.—Reuters
