Benchmark prices shot up from their weakest point of 2,070 ringgit on April 29 to a top of 2,200 ringgit on Wednesday, tracking big gains in overseas soyoil markets and as investors covered short positions after Indonesia approved a palm export levy to fund its biodiesel policies.
But prospects of swelling inventories in Malaysia, as well as investors booking profits from the rally, reined in gains, market players said.
"The preliminary data shows a much higher build-up in end-stocks. Market will see lots of position squaring ahead of MPOB on Monday," said Lingam Supramaniam, director at Malaysian-based commodities firm Pelindung Bestari.
The benchmark July contract on the Bursa Malaysia Derivatives exchange had edged down 0.5 percent to 2,173 ringgit ($604.87) a tonne by Thursday's close. Total traded volume stood at 29,058 lots of 25 tonnes each, below the usual 35,000 lots.
Industry regulator the Malaysian Palm Oil Board will release official data on the country's April palm stocks on May 11. A Reuters poll estimates end-stocks rose to a five-month high of 2.13 million tonnes, with crude palm output climbing 11.5 percent.
Indonesia has approved a regulation requiring exporters to pay a levy of $50 per tonne of crude palm oil and $30 for processed palm oil product shipments, which is expected to take effect by the third week of May.
Analysts say the new tax may adversely impact Indonesian and Malaysian companies that are solely in upstream operations in the short term, but will be overall supportive of palm prices.
"We agree with the consensus view that this is a short term pain, but could potentially boost biodiesel consumption and consequently, CPO price, in the long term," TA Securities said in a note on Thursday.
The U.S. July soyoil contract was down 0.1 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange fell 0.7 percent.
Brent crude oil headed up towards 2015 highs above $68 a barrel on Thursday after official data showed the first drawdown in U.S. crude inventories since January, evidence the market there is balancing after months of heavy oversupply.
Palm, soy and crude oil prices at 1010 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY5 2161 -5.00 2152 2163 93
MY PALM OIL JUN5 2177 -12.00 2169 2184 2518
MY PALM OIL JUL5 2173 -10.00 2161 2179 15702
CHINA PALM OLEIN SEP5 5108 -18.00 5072 5168 948898
CHINA SOYOIL SEP5 5890 -40.00 5860 5958 1119022
CBOT SOY OIL JUL5 32.88 +4.00 32.69 33.03 5086
INDIA PALM OIL MAY5 447.50 +4.00 444.20 447.90 983
INDIA SOYOIL JUN5 598.35 +5.15 592.30 598.80 36350
NYMEX CRUDE JUN5 61.04 +0.11 60.26 61.31 29314
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
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 3.5925 Malaysian ringgit)
($1 = 6.2069 Chinese yuan)
($1 = 64.19 Indian rupees)- Reuters