Crude palm oil futures on Malaysia's derivatives exchange ended higher Monday as investors covered short positions following weather concerns in soy-growing areas of South America.
However, gains were limited by lower export demand forecasts by cargo surveyors for the Jan. 1-20 period, market participants said.
The benchmark April contract on Bursa Malaysia Derivatives ended 0.8% higher at 2,420 ringgits a metric ton after moving in a MYR2,404-MYR2,428 range.
Concerns that dry weather in Argentina and Brazil could hurt soybean crops supported palm oil as both vegetable oils compete for similar export destinations.
The tropical oil trades at a wide price discount of $300/ton to soyoil, which may spur price-sensitive buyers to opt for it.
"Palm oil is supported by soy crop issues. CBOT soyoil may head toward 52 cents a pound," a Kuala Lumpur-based trading executive said, adding that this could pull up palm oil prices.
CBOT January soyoil settled 0.4% higher at 51.68 cents Friday.
Still, palm oil's upside will likely be limited as investors are wary of rising stockpiles in Malaysia due to lower shipments during the Jan. 1-20 period.
Intertek Agri Services said outbound sales during the period fell 17% from a month earlier to 830,830 tons, while SGS put the figure at 813,778 tons, a decline of 20%.
Shipments to China remained weak, data from the two surveyors showed. SGS put Chinese purchases at 193,300 tons, down 28%.
Investors are keeping a close watch on shipments to major consumer China following stricter quality control rules for cooking-oil imports into that country that came into effect Jan. 1.
In the cash market, refined palm olein was offered at $810/ton while cash CPO for prompt shipment was offered at MYR2,280/ton.
Open interest on the BMD was 176,691 lots, versus 181,478 lots Friday. One lot is equivalent to 25 tons.
A total of 25,074 lots of CPO were traded versus 44,307 lots Friday.
Ending BMD CPO futures prices in MYR/ton: Month Close Previous Change High Low Feb'13 2,370 2,358 +12 2,375 2,359 Mar'13 2,401 2,383 +18 2,408 2,387 Apr'13 2,420 2,400 +20 2,428 2,404 May'13 2,440 2,419 +21 2,446 2,427