KUALA LUMPUR: Malaysian palm oil futures slipped on Tuesday after hitting a two-year low the day before on rising stocks although a strong demand outlook helped by positive export data curbed losses. Data from cargo surveyor Intertek Testing Services showed palm oil exports in the first 25 days of September rose 8 percent, boosting some hopes of strong demand after a recent sell-off in commodity markets globally. "ITS showed an 8 percent increase, it looks to be a little bit more subdued given the strong pace at the start of the month, but it's still showing a decent recovery," said StanChart analyst Abah Ofon. By the midday break, the benchmark December contract on the Bursa Malaysia Derivatives Exchange slipped 0.8 percent to 2,626 ringgit ($856) per tonne. Palm oil prices on Monday tumbled to 2,577 ringgit -- a level unseen since September 2010 -- as rising stocks and bearish views by industry analysts at a vegetable oil conference in India dragged on the market. Total traded volumes on Tuesday stood at 12,005 lots of 25 tonnes each, a tad lower than the usual 12,500 lots. Analysts expect palm oil prices in the next few weeks to be lifted by falling yields and demand picking up as the market recovers from a seasonally low month of September.
"If productivity falls, which I believe it will, then that as well is going to be supportive of the complex," said Ofon, who pegged prices at 3,250 ringgit in the fourth quarter of 2012 and 3,500 ringgit for the first quarter of next year. "We expect that as heading into Q1 the market is really going to spike. There's a lot of things that are happening to suggest that any downside in palm prices is going to be short lived," he added. Brent crude climbed above $110 a barrel on Tuesday, recovering from a more than 1 percent drop in the previous session, as escalating tensions surrounding Iran offset concerns about weak demand in a still-fragile global economy. In other vegetable oil markets, U.S. soyoil for December delivery fell 0.4 percent as record pace of U.S. harvest weighed on sentiment in Asian trading hours. The most active January 2013 soyoil contract on the Dalian Commodity Exchange inched up 0.3 percent. - Reuters