VEGOILS-Palm dips to near 6-wk low, Europe keeps market on edge
* February end-stocks could ease to 2.2 mln T -analyst * Investors uneasy over Italy impact on markets -analyst * Palm oil to hover above 2,405 ringgit before fall -technicals (Updates prices and throughout) By Anuradha Raghu KUALA LUMPUR, Feb 27 (Reuters) - Malaysian palm oil futures inched down on Wednesday to a near six-week low, stretching losses into a sixth straight session with investors remaining cautious that uncertain overseas markets could weigh on demand for the tropical oil. Prices had crept up 0.7 percent by the midday break as traders retraced from liquidations earlier in the week, but dropped later to as low as 2,395 ringgit per tonne. Market players are now watching Italy's 6.5 billion euro auction of new 5- and 10-year bonds which kicked off at 1000 GMT for further trading cues. "There was some retracement in the market earlier but it could not sustain itself because there was no fresh news at those levels, so prices have come under more selling pressure," said a trader with a local commodities brokerage in Malaysia. The benchmark May contract on the Bursa Malaysia Derivatives Exchange fell 0.4 percent to 2,410 ringgit ($777) per tonne by the day's close. Prices traded in a tight range between 2,395 and 2,443 ringgit. Total traded volume stood at 34,090 lots of 25 tonnes each, higher than the usual 25,000 lots. Technicals showed Malaysian palm oil is expected to hover above a support at 2,405 ringgit per tonne for one trading session before breaking this level and falling further towards 2,361 ringgit, said Reuters market analyst Wang Tao. Palm oil production in Malaysia, the world's No.2 producer, has slowed from its seasonal peak in September. At the same time stronger-then-expected exports of Malaysian palm oil products -- the cheapest in the world -- are widely expected to help ease inventory levels that are still high. "With a rising export trend and falling production rate, we see a good chance the stockpile levels in February could come down," said Phillip Futures analyst Ker Chung Yang in Singapore. He expects end-stocks in February to fall to 2.2 million tonnes from 2.58 million now. But the uncertainty in Europe has hampered any sustained rally in palm, as investors fret over political gridlock in Italy which they fear could reignite the euro zone financial crisis and weaken global markets. "The inconclusive Italy scenario is worrying for the market, not only for palm oil but the commodities and equities markets as well. It's a timely reminder for global investors that the European crisis is not over yet," added Ker. In other markets, oil traded near $113 a barrel, edging up from a one-month low, as world powers ended two days of talks with Iran over its nuclear work with no sign of a breakthrough. In competing vegetable oil markets, U.S. soyoil for May delivery rose 0.1 percent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodity Exchange inched down 0.9 percent. Palm, soy and crude oil prices at 1028 GMT Contract Month Last Change Low High Volume MY PALM OIL MAR3 2390 +3.00 2370 2400 687 MY PALM OIL APR3 2400 -3.00 2387 2430 3241 MY PALM OIL MAY3 2410 -9.00 2395 2443 19397 CHINA PALM OLEIN SEP3 6732 -36.00 6676 6744 458156 CHINA SOYOIL SEP3 8324 -58.00 8280 8344 597700 CBOT SOY OIL MAY3 49.55 +0.16 49.29 49.67 12159 NYMEX CRUDE APR3 92.88 +0.25 92.58 93.08 14275 Palm oil prices in Malaysian ringgit per tonne CBOT soy oil in U.S. cents per pound Dalian soy oil and RBD palm olein in Chinese yuan per tonne Crude in U.S. dollars per barrel ($1=3.103 ringgit) (Editing by Clarence Fernandez and Himani Sarkar)
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