KUALA LUMPUR, July 26: Malaysian crude palm oil futures rebounded on Tuesday after a rise in rival Chicago soyaoil prompted buyers to lend support to a market that had lost almost four per cent in the previous two sessions. But the benchmark contract ended off the day’s highs as light selling emerged before the close.

Still, it settled above the 1,360-ringgit-a-ton mark it slipped from on Monday. Dealers said it could recapture the 1,370 level, which it briefly broke on Tuesday. It appears that the market’s mood to liquidate is subsiding, said a trader. But the fundamentals are still weak and caution may be needed.

Palm oil futures dived almost 2 per cent on Monday as export estimates for July remained soft. It lost another 2 per cent on Friday as producers tried to shield palm oil, sold abroad in dollars but traded at home in ringgit, from losing competitiveness after Malaysia dropped its currency peg of 3.8 to the dollar.

At Tuesday’s close, the benchmark third-month palm oil contract on Bursa Malaysia Derivatives, October, was up 9 ringgit, or 0.7 per cent, to 1,368 ringgit ($364.80) a ton. Its peak for the day was 1,373 while the low was 1,358.

Other traded months settled up 8 to 13 ringgit. Volume stood at 3,637 lots of 25 tons each. The market usually sees about 6,000 lots on an active day.

The volume is still restrained. This shows people are not going all out because the fundamentals are not too good, said another trader. Output of palm oil, in contrast, could grow three per cent in July from the official figure of 1.2 million tons in June, dealers said.

The thinner exports could mean that stocks of palm oil at the end of July could swell beyond June’s 1.18 million tons to touch as high as 1.22 million, they said. Tuesday’s prices were helped by a rebound in soyaoil futures on the Chicago Board of Trade (CBOT).

In physical dealings of crude palm oil on Tuesday, July and August saw final trades at 1,365-1,370 ringgit a ton in the southern region of Malaysia. In the central zone, business closed at 1,362.50-1,367.50 ringgit. Offers were seen at 1,370 ringgit and bids at 1,365. —Reuters