Malaysian palm oil futures recovered after falling to their lowest in three years on Monday, as a rise in Malaysian palm oil stocks in October missed market expectations and signalled a slowdown in inventory build-up. Prices fell to 2,220 ringgit ($725) per tonne before the midday break, a level last seen in November 2009, tracking steep drops in Dalian soybean oil and US soybeans after a larger-than-expected production forecast from the US Department of Agriculture (USDA) on Friday.
But the benchmark January contract on the Bursa Malaysia Derivatives Exchange closed up 0.4 percent at 2,324 ringgit after industry regulator the Malaysian Palm Oil Board reported a 1.1 percent increase in palm oil stocks to a record 2.51 million tonnes. The rise missed market expectations that stocks in the world's No 2 palm oil producer likely climbed 7.5 percent to 2.67 million tonnes.
"It is very bullish. Nobody expected this figure. Nobody. We were expecting a bigger glut than usual in stocks," said a trader with a foreign commodities brokerage in Malaysia. Total traded volumes stood at 48,969 lots of 25 tonnes each, much higher than the usual 25,000 lots despite expectations for a quiet market ahead of the Diwali and Awal Muharram holidays in Malaysia this week.
Market participants will be looking out for Malaysia's November 1-10 exports data from Societe Generale de Surveillance later, after another cargo surveyor Intertek Testing Services reported on Saturday a 16 percent rise from the previous month. In other vegetable oil markets, US soyoil for December delivery was down 0.7 percent in late Asian trade. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 3.9 percent lower, after earlier hitting its 4-percent daily limit.
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