OREANDA-NEWS. March 19, 2015. Malaysian palm oil futures rallied from a near seven-week low on Wednesday in a technical correction to end higher, though traders said weaker crude oil and soy prices would cap gains.

The benchmark June contract on the Bursa Malaysia Derivatives Exchange rallied in late trade to close 2.5 percent higher at 2,193 ringgit (\\$592) a tonne, after dipping to 2,128.

Market players said the correction was timely as prices have dropped 11 percent from a 2,400 ringgit peak in early March, but warned that palm's bearish trend will still prevail.

"We are in the midst of a technical-inspired correction, before fundamentals cap the rise," said a trader with a local commodities brokerage in Malaysia. "Only modest rallies are anticipated. The huge world supplies in 2015 will weigh on prices as local production picks up."

Weaker prices of crude and soy oil have also raised concerns palm might lose more market share, both as a fuel and for food.

Total traded volume stood at 59,533 lots of 25 tonnes on Wednesday, much higher than the usual 35,000 lots.

A weaker Malaysian ringgit, which usually spurs buying interest in the ringgit-priced palm feedstock, has given little relief to the downward pressure, traders say. The ringgit was trading at 3.7060 per US dollar late on Wednesday.

"What's supportive is just the ringgit, but I would think that is not really a strong support as the external factors are pressuring prices more," said Ryan Chua, a broker with Oriental Pacific Futures in Kuala Lumpur.

Indonesian palm oil exports dropped to a five-month low of 1.79 million tonnes in February, industry data body showed. However, overseas sales from the No. 1 producer are expected to pick up soon as China replenishes its depleting stockpiles of the tropical oil, traders and analysts said.

Indonesia crude palm oil output in February likely steadied near January levels, a survey of leading industry officials showed on Wednesday, although production is seen picking up in the coming months as the monsoons recede.

Brent prices fell on Wednesday on oversupply concerns as data showed US crude stocks had hit a record high.