KUALA LUMPUR: Malaysian palm oil futures rose more than 2% on Tuesday, after two sessions of decline, lifted by expectations of reduced palm production and low inventory in the country.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 108 ringgit, or 2.38%, to 4,637 ringgit ($1,060.86) a metric ton at the close.
The palm oil futures market is higher due to expectations of weak output and lower stock levels in the country, supported by strong demand, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
Dalian’s most-active soyoil contract fell 1.02%, while its palm oil contract rose 0.15%. Soyoil prices on the Chicago Board of Trade were up 1.64%.
Palm oil tracks prices of rival edible oils as it competes for a share of the global vegetable oils market.
Palm oil reverses losses on weaker ringgit, technical buying
Oil prices inched up after tumbling 6% in the previous session, as a U.S. plan to buy oil for the Strategic Petroleum Reserve (SPR) provided some support, although wider concerns over weaker future demand exerted pressure.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, weakened 0.3% against the U.S. dollar, making the commodity cheaper for buyers holding foreign currencies.
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