KUALA LUMPUR, July 26: Malaysian crude palm oil futures rebounded on weekend short-covering on Friday but the short-term outlook remained hazy due to slow consumer demand, traders said.
At the close, benchmark third-month October futures were five ringgit higher at 1,457 ringgit ($383.42) a ton.
The contract had touched a low of 1,439 ringgit after the Chicago Board of Trade (CBOT) soy futures fell on Thursday as rains brought some respite to the parched US Midwest soyabean hub.
Overall volume was heavy at 2,216 lots.
Some traders said buyers were closely watching the Malaysian market which has been volatile in the past few weeks, driven by weather forecasts for the Midwest.
Cargo surveyor SGS has reported July 1-25 palm oil exports at 713,431 tons, slightly higher than 702,750 tons in June 1-25.
The report showed declines in demand by the world’s largest edible oil importer India, which bought 72,760 tons in the first 25 days of this month against 122,516 tons in June 1-25.
There are enough physical sellers in the market. Refiners can sell oils very aggressively now. At this point, consumers are very reluctant to come in, said one trader.
They want to watch and see how the market behaves because rain is something which only God can predict, he added.
In India, patchy rainfall in many parts of the country during the southwest monsoon has raised the spectre of drought after more than a decade.
But there are no threats of famine or food shortages, last seen in the 1950s, thanks to adequate food stocks.
Good rains are crucial in India, driving rural consumption and demand for industrial products. More than 70 per cent of the billion-plus population earn their living from agriculture, which accounts for a quarter of gross domestic product.
Analysts said a drop in agricultural output could lead to a significant rise in imports of farm commodities such as edible oils and cotton.
India purchases almost half its requirement from countries such as Malaysia, Indonesia, Brazil, Argentina and the United States.
In the physical market, July and August CPO contracts saw bids at 1,465 ringgit a ton in the southern as well as central regions against sale offers at 1,470 ringgit.
Trade was reported at 1,460 to 1,465 ringgit for July/August (south) and at 1,460 to 1,467.50 for central (July/August).—Reuters