BR:Palm oil rebounds, euro zone uncertainty caps gains
SINGAPORE: Malaysian palm oil futures rebounded on Tuesday on bargain-hunting after earlier declines prompted by a radical Cyprus bailout plan, although gains were capped as uncertainty remained ahead of a vote on the plan.
Cyprus will decide on Tuesday whether to go ahead with a controversial plan to impose a levy on bank deposits to secure a $10-billion euro bailout from the European Union. The proposal announced over the weekend triggered declines in the global commodities and financial markets on Monday.
Palm oil traders are also looking ahead to Malaysia's March 1-20 export data on Wednesday for better indication of export demand after an almost flat growth in shipments for the first half of the month.
"Expectation for exports is almost flat to slightly lower. China's port inventories are almost full and cannot take in any shipment at the moment," said a Singapore-based trader with a global commodities house.
"And there seems to be a demand pull of palm olein from India, but it is offset by a lower crude palm oil demand."
By the midday break, the benchmark June contract on the Bursa Malaysia Derivatives Exchange had gained 1.6 percent to 2,422 ringgit ($777) per tonne. Prices traded in a range between 2,397 to 2,426 ringgit.
Total traded volume stood at 15,035 lots of 25 tonnes each, higher than the usual 12,500 lots.
Technical analysis shows Malaysian palm oil looks neutral in a range of 2,383 to 2,460 ringgit per tonne, and an escape will point a future direction, said Reuters market analyst Wang Tao.
Palm oil futures also drew some support from stronger soybean and soybean oil prices, after the oilseed edged higher on supply concerns from South America.
Palm oil tracks soybean oil prices closely as they are typically used as substitutes for one another.
Traders are watching closely Malaysia's palm inventory level, which fell to 2.44 million tonnes in February from January's 2.58 million, hoping that a seasonally slower production will help ease stocks further this month.
In other markets, Brent eased toward $109 a barrel on Tuesday as investors eyed a Cyprus vote later in the day on a bailout plan that revived concerns about the euro zone debt crisis, although losses were capped by a rosier economic outlook in the United States.
