KUALA LUMPUR, May 29: Malaysian crude palm oil futures rose on Thursday, recovering from sharp losses the day before as some investors were convinced that the sell-off in crude oil and other vegetable oil markets would be short-lived.

Palm oil, increasingly tracking record crude oil prices in recent weeks as more rival soyaoil gets diverted into the biodiesel sector following mandates in the United States and Europe, gained 18.5 per cent so far this year.

By the midday break, the benchmark August contract on the Bursa Malaysia Derivatives Exchange was trading up 11 ringgit at 3,598 ringgit ($1,111) per ton after going as high as 3,625.

The palm oil market outdid itself yesterday and some players are re-entering for some bargains, said a dealing manager with a foreign brokerage. The start in the recovery of crude oil and soyaoil shows that the sell-off might be a knee-jerk reaction.

Oil retreated to just over $130 a barrel on Thursday, after a $2 jump in the previous session, as a strengthening dollar more than offset fears of supply disruptions in Nigeria.

Other traded months on Bursa Malaysia rose between 11 and 45 ringgit.

Traded volumes slipped to 3,473 lots of 25 tons each from the usual 5,000 as traders waited to see how the Argentine soy farmers strike and demand for palm oil cargoes would pan out.

The Argentine strike does provide the US soay complex and palm oil support, said Sarina Lesmina, an Indonesia-based analyst with Macquarie Research.

And trading was paralyzed at Argentina’s main grains exchange in Rosario signalling possible interruptions to exports of soy, corn, wheat and beef.

Physical traders in Malaysia say buying interest has been very quiet.

China is nowhere to be seen, India is buying some but most of the action is from Pakistan and United States, said a dealer with a local commodities broker.

Although palm oil exports for May 1-25 edged lower to 1,050,000 tons, United States, Jordan and Pakistan were among the top five buyers, data from cargo surveyors showed.

In Malaysia’s cash market, crude palm oil for June and July shipments in the southern region was quoted at 3,620/3,630 ringgit. Trades done between 3,630 and 3,640 ringgit per ton.—Reuters