Malaysian palm oil futures dip

KUALA LUMPUR, Feb 27 (Reuters): Malaysian palm oil futures dipped on

Thursday as investors booked profits after the previous session's gains, but concerns over unfavourable weather squeezing supplies curbed losses and kept prices near a 17-month high.

Prices jumped to 2,818 ringgit late Wednesday, their highest since Sept. 20, 2012, underpinned by worries of dry weather hurting production in Southeast Asia where most of the world's palm oil is grown.  

"There's a bit of profit-taking today after the strong rally yesterday. The range will be around 2,780-2,850 ringgit," said a trader with a foreign commodities brokerage, adding that full month production is slated to fall more than 13 per cent from January's 1.51 million tonnes.

Benchmark prices have climbed nearly 9 per cent in February-their biggest gain in four months-on anticipation that the sharp drop in output would tighten stocks of the tropical oil.

Planters told Reuters that dry weather lasting more than two months can hurt yields six months to two years down the line.

By the midday break, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had edged down 0.8 per cent to 2,787 ringgit ($852)  per tonne, with prices trading between 2,782-2,807 ringgit.

Total traded volume stood at 11,908 lots of 25 tonnes, just below the average 12,500 lots.

Technicals showed that Malaysian palm oil third month contract is expected to drop to 2,747 ringgit, due to the completion of a five-wave cycle that developed from the Jan. 28 low of 2,519 ringgit, said Reuters market analyst Wang Tao.

Investors will be keeping an eye on Malaysian export data for the full month of February on Friday to gauge global demand for the tropical oil.  

Export demand had dwindled towards the end of the month, slowing from the rapid growth early February, but traders said end-stocks were widely slated to fall more than 5 per cent from the current 1.93 million tonne level due to weaker output. [

In other competing vegetable oil markets, the U.S. soyoil contract for May lost 0.6 per cent in early Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange rose 1.1 per cent.   

Brazil's crushing association, Abiove, is standing by its forecast for a record soy crop of 88.6 million tonnes despite concerns over heavy rains in top growing state Mato Grosso and dry weather in No. 2 growing state Parana.

Brazil's state government earlier said Parana had lost some 2 million tones of soybeans to drought and hot weather in January and February. Smaller supplies of soybeans for crushing would stoke soyoil prices, potentially pushing buyers to rival palm oil.