SINGAPORE, April 4: Malaysian crude palm oil rebounded to close higher on Tuesday as traders covered short positions, but a strengthening ringgit is likely to prevent a substantial rise in prices. The currency hit an eight-year high at 3.6780 per dollar earlier in the day, extending gains in the face of broad-based dollar weakness. Corporate flows and an absence of central bank intervention has helped the ringgit to gain strength.

There was short covering at lower levels as the market went down a bit in the past few sessions, said a Kuala Lumpur trader. But prices will be under downward pressure from the ringgit.

A stronger ringgit against the US dollar makes palm oil more expensive for overseas buyers.

The June contract on Bursa Malaysia Derivatives ended 6 ringgit higher at 1,427 ringgit ($388) a ton. April was up 6 ringgit at 1,380 and May was up 5 ringgit at 1,409. Volumes for the June contract were 2,514 lots of 25 tons each.

The Malaysian palm market ended one per cent lower on Monday after a surprisingly sharp rise in US soy acreage raised prospects of growing supplies of vegetable oils.

Serious buyers are absent, another trader said.

Traders are also expecting a steady rise in Malaysian output in coming months, in addition to a lack of demand from key buyers such as India, which is expected to harvest a bumper domestic oilseeds crop, and China, which is keen on buying more soy oil.

Production is improving in certain areas, one trader said.

In the spot market, sellers were offering cargoes at 1,400 ringgit a ton for immediate shipments.

But buyers are reluctant to pay these kind of prices. They are keen only at 1,395. We have seen some deals being finalised at 1,395, said one trader.

Soya futures on the Chicago Board of Trade fell to a two-month low on Monday on follow-through sales from Friday, which stemmed from a surprisingly large US soy acreage estimate. May soyaoil was down 0.15 cent at 22.64 cents per lb., with the back months 0.33 lower to 0.10 higher.—Reuters