JAKARTA: Malaysian palm oil futures rose for a second session on Wednesday on bargain buying despite bearish sentiment from industry analysts.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 42 ringgit or 0.92% at 4,607 ringgit ($1,040.89) a metric ton at closing.
“Since the market held at 4,550 ringgit levels and no new fresh selling, some bargain buying came around,” a Kuala Lumpur-based trader said.
A recovery in palm oil production and lower imports by rate-sensitive consumers are expected to drive prices lower, chipping away the premium of the tropical oil over rivals, even as top producer Indonesia boosts biodiesel production, industry analysts told a conference in Kuala Lumpur this week.
Dalian’s most-active soyoil contract lost 0.75%, while its palm oil contract gained 0.22%. Soyoil prices on the Chicago Board of Trade (CBOT) slipped 0.02%.
Palm oil gains on strong rival markets
Malaysia’s palm oil stocks are set to drop to its lowest in nearly two years by the end of February, as floods hit production and the Ramadan festival boosted demand, a senior regulatory official said.
Palm oil supplies will likely remain tight for the next two to three months as floods have affected production in the world’s top two producers, Indonesia and Malaysia.
Palm oil may retest the resistance zone of 4,608-4,625 ringgit per metric ton, as the bounce triggered by support at 4,542 ringgit looks incomplete.
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