* Investors worry soft demand may follow in March -trader
* Palm oil biased to drop to 2,476 ringgit -technicals
(Updates prices)
By Anuradha Raghu
KUALA LUMPUR, Feb 22 (Reuters) - Malaysian palm oil futures
inched down in light trade on Friday, as lingering investor
concern on the tropical oil's sluggish demand weighed on prices.
Seasonally slowing output in Malaysia, the No. 2 producer of
the world's most consumed vegetable oil, is expected to help
ease stockpiles in February but exports need to pick up faster.
Inventory levels, which have hovered above the 2.5 million
tonne mark since October last year, finally edged down in
January, but only by 1.9 percent to 2.58 million tonnes,
compared with a bigger fall of 2.9 percent expected by traders.
"There is concern soft demand may persist in March, and
traders ponder how much upside is left," said a trader with a
local commodities brokerage in Malaysia.
"Some consumers remain cautious about buying into the market
until they see signs that palm oil demand is improving."
At the close, the benchmark May contract on the
Bursa Malaysia Derivatives Exchange eased 0.2 percent to 2,532
ringgit ($817) per tonne, but still posted a weekly gain of 2
percent. Prices traded in a tight range between 2,527 and 2,555
ringgit on Friday.
Total traded volume stood at 18,939 lots of 25 tonnes each,
below the typical 25,000 tonnes.
Technicals showed Malaysian palm oil is biased to drop to
its Feb. 15 low of 2,476 ringgit per tonne, as it may have
completed an uptrend that developed from the Dec. 13, 2012 low
of 2,217 ringgit, said Reuters market analyst Wang Tao.
Strong output amid a tepid global economy and dry demand
last year weighed on palm oil markets in Malaysia, causing
prices to tumble 23 percent and record their biggest loss since
the 2008 financial crisis.
But the lower prices have shifted demand towards palm oil
that trades at a steep discount of almost $300 per tonne to
competing soyoil. Malaysian palm oil is also currently the
cheapest vegetable oil in the market after its government
revamped export tax structures in the hope of spurring demand.
Brent crude oil rose more than $1 per barrel on Friday,
recovering some ground after three days of heavy falls on
worries over the state of the world economy.
In other vegetable oil markets, the U.S. soyoil for May
delivery crept up 0.5 percent in late Asian trade. The
most-active September soybean oil contract on the
Dalian Commodity Exchange closed 0.6 percent higher.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR3 2479 -2.00 2475 2495 553
MY PALM OIL APR3 2506 -7.00 2505 2529 2886
MY PALM OIL MAY3 2532 -4.00 2527 2555 11833
CHINA PALM OLEIN SEP3 7066 +46.00 6992 7104 580722
CHINA SOYOIL SEP3 8702 +52.00 8616 8766 665132
CBOT SOY OIL MAR3 51.61 +0.30 51.15 51.79 4537
NYMEX CRUDE APR3 93.01 +0.17 92.92 93.48 17628
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=3.102 ringgit)
(Editing by Prateek Chatterjee and Tom Hogue)
