Malaysian palm oil futures closed flat on Wednesday as short covering in the second half of trade helped the market recover from losses earlier in the day. The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed at 2,408 ringgit ($619.34) a tonne on Wednesday evening. It earlier fell as much as 1.2 percent to an intraday low of 2,380 ringgit.
Palm had jumped 1.6 percent in its previous trading session, after seeing six straight days of declines. Trading volumes on Wednesday stood at 52,515 lots of 25 tonnes each at the close of trade. "The market saw some short covering after today's lows," said a Kuala Lumpur-based futures trader, who also said market sentiment was not strong on the lack of bullish news, referring to expectations of rising production and slow demand.
Malaysia's palm oil production for April is expected to rise in line with seasonal trend. It last rose 17.2 percent on-month to 1.57 million tonnes in March, its highest March production since 2000. Demand for the tropical oil in April, however, is expected to be weak. Shipments from Malaysia during the first half of the month rose between 5 percent and 6 percent from the corresponding period in March, compared with a rise of 25 percent to 32 percent from April 1-10, data from inspection company AmSpec Agri Malaysia and cargo surveyor Societe Generale de Surveillance showed.
In other related oils, the Chicago Board of Trade's May soyabean oil contract edged up as much as 0.4 percent, while the May soyabean oil on China's Dalian Commodity Exchange climbed up to 0.4 percent. Meanwhile, the Dalian May palm oil contract gained 0.8 percent. Palm oil prices are affected by movements in rival edible oils, as they compete for a share in the global vegetable oils market.