KUALA LUMPUR, May 30: Outlook of steady demand from main buyers such as Pakistan, India and China plucked Malaysian palm oil futures from the negative territory at the close on Thursday.

Traders expected palm oil exports to reach one million tons in May, up from the official 863,120 tons in April because of healthy appetite by major buyers and delays in soyaoil shipments from South America.

Short covering pushed the benchmark third-month August contract nine ringgit higher at 1,399 ringgit ($368.16) a ton after trading as low as 1,373 ringgit.

Volume was heavy at 3,215 lots, but down from Wednesday’s 5,420 lots.

Cargo surveyors ITS and SGS are scheduled to release their May exports data on Friday.

You will see profit taking if exports are below one million tonnes. I peg immediate support at 1,380 ringgit for tomorrow and if this level is broken, there will be a long liquidation, said one trader.

But even if exports reach one million tonnes, the market won’t go up much because the data will be factored in, he added.

Traders said low domestic edible oil stocks will push up Pakistan’s palm oil imports to as high as 200,000 tons in coming months despite the government’s plan to raise sales tax on imports.

Pakistan, one of the world’s main edible oil buyers, is considering increasing the sales tax on imports of the oils to 20 per cent from 15 per cent in the federal budget due next month, traders say. It also plans to levy a 15 per cent additional tax on finished goods, such as refined oil, they say.

In neighbouring India, the world’s largest edible oil importer, large increases in monthly palm oil imports were also expected.

Traders said low stocks and delays in the arrivals of soyaoil from Argentina would boost India’s palm oil imports to 300,000 tons in coming months from the usual monthly 200,000.

In the physical market, the June contracts for the southern region was offered at 1,405 ringgit a tonne against bids of 1,400 ringgit. Deals were done at 1,395 to 1,400 ringgit.

June contract for the central region saw offers at 1,405 ringgit a ton against bids of 1,400 ringgit. Business was reported at 1,397.50 to 1,400 ringgit.

July (south) was offered at 1,405 ringgit against bids of 1,400 ringgit. July (central) saw offers at 1,410 ringgit against bids of 1,400 ringgit. No deals were done.—Reuters