SINGAPORE, Feb 5 (Reuters) - Malaysian palm oil futures eased on Tuesday on profit-taking after four straight sessions of gains, but hopes of better-than-expected inventory and export data next week limited losses. Persistent concerns over dry weather in South America and its impact on the soy crop there also kept a floor under palm oil prices.
Lower soybean oil production could shift some demand to the cheaper palm oil, which in turn may help ease record stocks for the tropical oil. "We are revising our January inventory forecast to 2.57 million tonnes from 2.66 million tonnes as we believe that exports in the month may have turned out better than expected at a 7 percent decline as compared to our earlier estimate of an 11 percent decline," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, said in a note. "Although we believe the overall data will be positive on prices, the upside should still be limited in view of the still high inventory level at way above 2 million tonnes."
January palm oil stocks data from the Malaysian Palm Oil Board is due on Feb. 13. Inventory levels in the world's No.2 producer hit an all-time high of 2.63 million tonnes in December. Traders are also eyeing Feb. 1-10 export data after a better-than-expected performance in January. By the close, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had shed 0.7 percent to 2,549 ringgit ($826) per tonne, after adding almost 5 percent in the last four sessions. It rose to 2,592 ringgit the previous day, just slightly off a 3-month high touched on Thursday. Total traded volumes stood at 25,536 lots of 25 tonnes each, slightly higher than the average 25,000 tonnes. Technical analysis shows palm oil is expected to fall to 2,510 ringgit, Reuters market analyst Wang Tao said.
In other markets, oil edged higher above $115 a barrel on Tuesday as investor concerns faded about political risks in the euro zone, although ample supply could hinder its chances of extending a three-week rally. In competing vegetable oil markets, U.S. soyoil for March delivery eased 0.1 percent in late Asian trade, giving up some gains from the previous sessions. The most active September soybean oil contract on the Dalian Commodity Exchange also edged lower, coming off the previous day's three-month high.
Today’s Support and Resistance for benchmark April contract is located around 2,527 and 2,560 respectively.
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