April 18 (Bloomberg) -- Palm oil advanced on speculation that a drop to the lowest level this year was overdone.
The contract for July delivery climbed 1.5 percent to close at 2,309 ringgit ($761) a metric ton on the Bursa Malaysia in Kuala Lumpur. Futures are set for a 1.5 percent drop this week.
Palm oil, used in everything from candy to noodles to biofuels, are headed for a fourth week of declines and West Texas Intermediate crude dropped to the lowest level in four months, reducing the appeal of the tropical oil as feedstock. The decline prompted “some short-covering,” said Prathamesh Mallya, an analyst at AnandRathi Commodities Ltd. in Mumbai. Short-covering refers to investors reversing bets on declining prices.
“Some of the technical indicators show that the downtrend momentum has eased a little bit,” said Benny Lee, chief market strategist at Jupiter Securities Sdn. in Kuala Lumpur. “It has been quite oversold in the short term and we expect a technical rebound to 2,350 ringgit. Volumes are quite low, so I don’t really see a lot of buying strength.”
Soybean oil for July delivery gained 0.2 percent to 49.56 cents a pound on the Chicago Board of Trade and soybeans climbed 0.6 percent to $13.8775 a bushel.
Refined palm oil for September delivery lost 0.4 percent to close at 6,086 yuan ($985) a ton on the Dalian Commodity Exchange, while soybean oil retreated 0.8 percent to end at 7,584 yuan a ton.
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