KUALA LUMPUR, March 26: Malaysian palm oil futures returned to positive territory on Tuesday due to a technical rebound and ideas about tight soybean supplies in China, traders said.

At the close, the benchmark third-month June contract was unchanged at 1,137 ringgit ($299.21) a tonne after trading as low as 1,120 ringgit on liquidation.

The contract had touched a high of 1,140 ringgit on gains in Alliance/CBOT/Eurex (a/c/e) and rises in Dalian soyabean futures, which suggested China could be suffering a shortage of soyabeans.

Volume was heavy at 3,032 lots.

Rises in Dalian futures suggest China is not receiving soyabeans because of the GMO rule. This will help the palm oil market, said one trader.

China struck a compromise with the United States in an apparent relaxation of its rules on genetically modified organisms (GMOs) which has hampered $1 billion of annual Sino-US soyabean trade.

Currently the market is oversold (but) it may also go lower, said Jennifer Ooi, analyst at a trading house in Kuala Lumpur.

If the market can hold at 1,125 ringgit in the next few days, we can expect to see a rebound, she added.

In physical palm oil, the March/April contract for the southern and central regions saw bids at 1,130 ringgit a ton versus offers at 1,140. Trade was reported at 1,125 to 1,130 for both sides.

The May contract for south and central saw bids at 1,135 ringgit against offers at 1,145. There were no deals.—Reuters