SINGAPORE: Malaysian palm oil futures staged a late rally Friday to secure a close above 5,600 ringgit a tonne, after hovering below that level for the majority of the day in fairly quiet trade.
Traders said gains in global crude oil markets, alongside the enduring strength in soybeans, aided in triggering the late buying spree.
Market participants are still assessing the impact of Indonesia's new curbs on palm exports, after the world's top palm oil producer and exporter shocked global edible oil markets last week by implementing a new rule that made it mandatory for producers to sell 20% of their output to domestic consumers at fixed prices.
The rule change has clouded the outlook for crude palm oil supplies from Indonesia, and upended global edible oil markets by making what is traditionally the cheapest vegetable oil the costliest among the three major edible oils traded across the world.
Palm ends lower after holiday break, Indonesia curbs limit losses
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed up 1.96% at 5,621 ringgit ($1,344) per tonne.
Global crop prices recovered on Friday from Thursday's spell of profit taking, with March soybeans and corn regaining footings above psychologically significant price levels to stay on course to consolidate recent gains.
Most-active soybean futures were on course for their largest weekly gain since last June, and could see follow-through buying next week once Chinese traders return from their week-long Lunar New Year break, said a Singapore-based oilseed trader.
"China has some catching up to do in terms of pricing in the global soybean supply situation," he said, in reference to recent downgrades in crop size by key agriculture consultants.
"Global balances for many trading houses have tightened in the past week, but China hasn't been around to react."
World food prices rebounded in January and remained near 10-year highs, led by a jump in the vegetable oils index, the UN food agency said on Thursday.
Corteva Inc expects prices for grains and oilseeds to remain high this year on record demand levels, its chief executive said on Thursday, following the insecticide and seed company's upbeat sales outlook a day earlier.
Palm oil may rise into the 5,608-5,676 ringgit range, as it is stabilising around a support at 5,484 ringgit per tonne, said Reuters technical analyst Wang Tao.
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