18/05/2012 (Reuters) - Malaysian palm oil futures regained ground on Thursday after steep losses the previous day, but traders remained cautious on concerns a possible Greek exit from the euro zone could heighten risk of a global recession and hurt commodity demand. 

Palm oil suffered its sharpest drop since February 2011 on Wednesday, setting the stage for a recovery on bargain hunting.

"This is some sort of a replication of what happened in May last year when the whole commodities market was going through a very volatile session," said Ker Chung Yang, an analyst with Phillip Futures in Singapore.

"Today we see some short-covering, some retracement. The 3,000-ringgit level is proving to be a strong psychological support. In the coming sessions we can see how much confidence investors have on palm oil." 

Benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange inched up 0.3 percent to close at  3,095 ringgit ($995) per tonne, after going as high as 3,146 ringgit. Prices closed at 3,085 ringgit the previous day, their lowest since Feb. 3.

Traded volumes stood at 32,671 lots of 25 tonnes each, higher than the usual 25,000 lots.

Traded volumes hit an all-time high of 63,019 lots on Wednesday, surpassing the previous record of 48,741 lots on Nov. 17 last year, due to increased hedging activities amid volatility and uncertainty in global financial markets.

Volatility in global markets has overshadowed local fundamentals to dominate sentiment in the palm oil market this week, triggering wild swings in prices.

"It's mostly what's happening in Europe and Greece and not so much about the oilseeds market these days," said Ker from Phillip Futures.

Malaysian palm oil exports for May 1-15 rose 0.7 percent, said cargo surveyor Intertek Testing Services.

Another cargo surveyor, Societe Generale de Surveillance, however, reported a 7 percent drop in for the same period, due to lower shipments to China and India.

On the technicals front, palm oil will end a rebound from Wednesday's low of 3,052 ringgit when it hits resistance around 3,136 ringgit, and drop back to 3,052 ringgit, said Reuters market analyst Wang Tao.

Brent crude held steady above $109 on Thursday, supported by a rebound in U.S. oil prices on hopes that a reversal in oil flow for the Seaway pipeline will reduce a supply glut in the U.S. Midwest.

In other vegetable oil markets, the most active U.S. soyoil contract for July gained 0.2 percent in late Asian trade, while the most active Dalian soyoil September contract  was almost flat.   

  Palm, soy and crude oil prices at 1003 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JUN2    3110   +10.00    3107    3159    1262
  MY PALM OIL      JUL2    3105   +12.00    3101    3155    6237
  MY PALM OIL      AUG2    3095   +10.00    3095    3146   18537
  CHINA PALM OLEIN SEP2    8156   -36.00    8080    8200  206160
  CHINA SOYOIL     SEP2    9314    -2.00    9246    9350  399706
  CBOT SOY OIL     JUL2   50.53    +0.10   50.45   50.99   12575
  NYMEX CRUDE      JUN2   93.13    +0.32   92.70   93.72   21188

  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 = 3.11 ringgit)