(Recasts to reflect price reversal, adds new quote, updates
* Palm rises to 2,330 rgt in late trade on technical buying
* Ringgit strengthens to 3.2310 in late trade
* Palm oil neutral in 2,265-2,327 ringgit range
By Anuradha Raghu
KUALA LUMPUR, Oct 1 (Reuters) - Malaysian palm oil futures
ended higher on Tuesday, posting their third straight session of
gains and reversing morning losses as technical buying supported
prices, although bearish investor sentiment capped gains.
By Tuesday's close, the benchmark December contract
on the Bursa Malaysia Derivatives Exchange had edged up 0.4
percent to 2,330 ringgit ($720) per tonne. Prices reached as
high as 2,332 ringgit, the highest since Sept. 18.
"It's because of technical short-covering," said a trader
with a foreign commodities brokerage. "The palm market was
bearish in the morning because of the big drop in soyoil and
soybean markets. But towards the afternoon prices rose and that
triggered buy-stop orders," the trader added.
Prices fell 1.5 percent in the early session with other
edible oils after a U.S. agricultural report surprised investors
with higher-than-expected supplies of competing oilseeds.
U.S. soybean stockpiles were estimated at 141 million
bushels, the Agriculture Department said on Monday, far larger
than the 124 million expected by analysts and traders. Chicago
soybeans slid to a six-week low.
Larger supplies of soybeans for crushing into soyoil could
snatch demand away from palm oil, a rival vegetable oil.
Sentiment was also hurt by forecasts of a seasonal rise in
palm oil output as trees produce more fruit, although some
traders said stockpiles could stay below the two million tonne
level for now.
Stocks at end-August stood at 1.67 million tonnes, having
fallen nearly 40 percent from record highs in December.
A trader with a local commodities brokerage told Reuters
that market players believed "prices won't fall to 2,200
ringgit, because despite the pickup in production, end-stocks
don't show signs of going above 2 million metric tonnes."
The Malaysian ringgit strengthened further late on
Tuesday, rising 0.88 percent to 3.2310, as the U.S. government
began a partial shutdown that weighed on the dollar. The
stronger local currency capped prices and made the
ringgit-priced feedstock more expensive for overseas buyers.
Total traded volumes stood at 23,244 lots of 25 tonnes each,
below the average 35,000 lots.
On the technical front, Malaysian palm oil looks
neutral in a range of 2,265-2,327 ringgit per tonne and only an
escape will point to a direction, said Reuters market analyst
Amid forecasts of rising Southeast Asian palm oil output,
prices may get some respite from the monsoon season that could
hit the region in October.
Indonesia, the world's largest producer, said on Monday its
production may rise only 5 percent to 26.7 million tonnes this
year due to wet weather conditions, below previous estimates of
28 million tonnes.
Wet weather could disturb pollination of fresh fruit
bunches, while heavy rain storms could disrupt harvesting and
In other markets, Brent crude eased to $108 a barrel on
Tuesday, near a seven-week low, on worries that a shutdown of
the U.S. government will crimp oil demand, while easing tensions
in U.S.-Iran nuclear talks boosted prospects for rising supply.
In competing vegetable oil markets, the U.S. soyoil contract
for December rose 0.1 percent in late Asian trade. The
Dalian Commodities Exchange was closed for a holiday and will
reopen on Tuesday Oct. 8.
Palm, soy and crude oil prices at 1039 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2377 +13.00 2338 2377 520
MY PALM OIL NOV3 2331 +13.00 2285 2332 2186
MY PALM OIL DEC3 2330 +9.00 2284 2332 17281
CHINA PALM OLEIN JAN4 5384 -2.00 5370 5418 230740
CHINA SOYOIL JAN4 6960 -52.00 6934 7008 359152
CBOT SOY OIL DEC3 41.13 +0.03 40.98 41.20 5181
NYMEX CRUDE NOV3 102.52 +0.19 101.84 102.58 17165
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1=3.233 Malaysian ringgit)
(Editing by Richard Pullin and James Jukwey)