Malaysian palm oil ended down more than half a percent on Monday after a fresh drop in rival US soyaoil and bearish export estimates for January. But dealers said there could be a rebound if short covering returned after on Tuesday's market holiday. "There's been a lot of selling lately, so there's an even chance of covering back, especially if exports do better next month," said a trader.

The benchmark third-month crude palm oil contract on Bursar Malaysia Derivatives, April, closed down 8 ringgit, or 0.6 percent, at 1,274 ringgit ($335.26) a tonne. The contract slid more than 2 percent last week, pounded by falls in soyaoil and data showing palm oil exports were weakening after an aggressive performance for the period of January 10 to 20.

Soyaoil futures on the Chicago Board of Trade hit contract lows on Friday, with delivery for March down 0.19 cent at 19.25 cents per lb. Soya and palm compete for similar export markets and their prices often move in step.

Society General de Surveillance, an independent surveyor of Malaysian oil palm cargoes, estimated on Monday that export fell 5.8 percent in January from figures it had given for December.

Dealers said a tight freight situation has also kept a rein on exports. Palm oil shippers have been left with few options to carry their oil since mid-January as buyers of "clean petroleum products" fuel mainly used for industrial purposes started paying more for vessels amid a spike in bunker prices.

Freight brokers said on Monday ships to ferry palm oil could be in short supply until mid-February as movement of industrial fuels dominate due to high bunker oil prices.

Aside from the eight-ringgit drop in the benchmark April contract, other traded months for palm oil on Bursar Malaysia ended down seven to eight ringgit on Monday.

Overall volume on the futures market stood at 4,723 lots, compared with than the 6,000 lots or more seen on a busy day. In physical crude palm oil, contracts for February and March saw bids at 1,282.50 ringgit a tonne and offers at 1,285 ringgit in Malaysia's southern and central regions.

February bids/offers closed at 1,295/1,300 on Friday. Trades on Monday were reported at 1,285-1,282.50 for both months and regions.

PALM OIL FUTURES:

January (south): 1285.

Open/High/Low: 1276/1278/1270.

Previous closes: 1300.

PALM OIL PHYSICALS:

April (3rd month): 1274.

Previous settlement: 1282.

FUTURES:

Benchmark April down 8 ringgit at 1,274 ringgit ($335.26) a tonne.

PHYSICALS:

January offers down 15 ringgit a tonne.

Copyright Reuters, 2005