Crude palm-oil futures on Malaysia's derivatives exchange rose Friday as some investors covered short positions after palm oil prices tumbled to a three-year low Thursday.
The benchmark February contract at Bursa Malaysia Derivatives settled 2% higher at 2,275 ringgit (US$744) a metric ton after trading in a MYR2,232-MYR2,285/ton range. CPO prices registered a low of MYR2,217/ton Thursday, the lowest since mid-November 2009.
Bullish economic data from China on Friday morning spurred hopes of a rebound in the world's second-largest economy and also incited investors to pour into the market, underpinning CPO prices, market participants said.
HSBC's preliminary purchasing managers' index hit a 14-month high of 50.9 in December, compared with a final reading of 50.5 for November.
This indicates that China's appetite for commodities is sustainable, and continued demand for vegetable oils such as palm oil could help ease concerns about Malaysia's rising palm oil inventories, which hit a record high at the end of November, a Kuala Lumpur-based trader said.
Meanwhile, Malaysia's export tax for January, likely to be revealed Monday, is expected to be close to zero and should stimulate demand for palm oil, boosting shipments from the world's second-largest palm oil producer, a Kuala Lumpur-based trading executive said.
Malaysia's Dec. 1-15 palm-oil exports data from cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. are due in the coming days and will also impact prices, participants said.
Dec. 1-10 exports fell 2.8% from a month earlier to 504,032 tons, Intertek said Monday. SGS on Monday estimated exports for the same period at 516,841 tons, up 0.4%.
CPO prices could edge upward if exports rise, they said.
In the cash market, refined palm olein for January shipment was offered at $767.50/ton, while cash CPO was offered at MYR2,180/ton.
Open interest on the BMD was 197,356 lots, versus 185,512 lots Thursday. One lot is equivalent to 25 tons.
A total of 44,840 lots of CPO were traded versus 34,576 lots Thursday.
Ending BMD CPO futures prices in MYR/ton: Month Close Previous Change High Low Dec'12 2,100 2,042 +58 2,100 2,100 Jan'13 2,190 2,142 +48 2,195 2,153 Feb'13 2,275 2,230 +45 2,285 2,232 Mar'13 2,346 2,303 +43 2,356 2,303