11/02/2011 (Business Recorder) - Malaysian palm oil futures ended off three-year highs hit earlier on Thursday as traders booked some profits after a slew of industry data showed tight vegetable oil supplies at a time when demand has picked up. Industry regulator Malaysian Palm Oil Board said January palm oil stocks fell to a six-month low, as floods and heavy rains curbed output.

The report comes hot on the heels of US Department of Agriculture (USDA) data showing tighter soyaoil stocks and a lower forecast for Argentina's soya crop that earlier suffered a dry spell. "There is general strength in the market even though some players have taken profits. Exports are doing very well and we could see a further stock draw this month," said a trader with a local commodities brokerage.

The benchmark April crude palm oil contract on the Bursa Malaysia Derivatives Exchange rose as much as 0.9 percent to 3,967 ringgit ($1,306), a level not reached since March 2008. The contract later settled 0.1 percent lower at 3,926 ringgit a tonne. Overall volumes more than doubled to 35,028 lots at 25 tonnes each, compared to the usual 15,000 lots. Credit Suisse said in a note that foreign participation in palm oil futures are at record high and the market could be vulnerable to profit-taking.

Technicals pointed to a decline. A Reuters analysis showed palm oil may retrace to 3,886 ringgit per tonne, and a bullish target at 4,060 ringgit has been temporarily aborted, as a five-wave cycle may have completed at 3,967 ringgit. But strong Malaysian exports in February after two months of declines limited losses in palm oil futures. Cargo surveyor Intertek Testing Services said February 1-10 palm oil exports jumped 45.7 percent from the same period a month ago. Another surveyor, Societe Generale de Surveillance, saw a 28.5 percent rise. "With stocks already at the low side and strong exports, we are in a for at least a bullish two to three months," said another trader.

The most active September soyaoil contract on China's Dalian Commodity Exchange rose 1.0 percent, playing catch up with overseas markets after country's financial markets were closed for one-week Lunar New Year holiday. US soyaoil for March delivery fell 0.1 percent in Asian trade after posting strong gains on the USDA report.