By Mei Mei Chu

KUALA LUMPUR, June 23 (Reuters)Malaysian palm oil futures firmed on Thursday, lifted by bargain-buying after crashing to a six-month low in the previous session, but rising supply outlook and weakness in crude and rival edible oils limited gains.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange gained 74 ringgit, or 1.64%, to 4,573 ringgit ($1,038.14) a tonne by the midday break.

“What we are witnessing today is a mild short-covering amid an overall bearish market,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

June production is expected to increase about 8-9%, but demand is worrisome, he said, adding that fresh demand will remain slow with the current sell-off.

Malaysia’s exports during June 1-20 nosedived between 10% and 17% from the month before, according to cargo surveyors data, and demand is expected to remain subdued as larger producer Indonesia moves to boost its shipments.

In related oils, Dalian’s most-active soyoil contract DBYcv1 fell 4.4%, while its palm oil contract DCPcv1 slipped 4.3%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 1.5%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Oil prices continued to pull back, dropping more than 2% as investors recalibrated assessments of recession risks and fuel demand amid interest rate hikes in major economies. O/R

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

“The overall scenario remains bearish for prices and any recovery will be short lived,” Paramalingam said.

Palm oil may test a resistance at 4,742 ringgit per tonne, a break above which could lead to a gain to 4,896 ringgit, Reuters technical analyst Wang Tao said. TECH/C

($1 = 4.4050 ringgit)

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(Reporting by Mei Mei Chu; Editing by Rashmi Aich)

((Meifong.chu@thomsonreuters.com))

Source: Nasdaq

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