SINGAPORE: Malaysian palm oil futures rose on Tuesday, driven by concerns about severe rains disrupting production the world’s top two producers, along with strong demand from China, although weakness in rival oils capped gains.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed up 45 ringgit, or 1.15% to 3,949 ringgit ($835.94) a metric ton, a two-month high.
Production issues in Indonesia and Malaysia due to heavy rains fuelled palm oil futures amid good demand from China, said Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand & Co.
Meteorological agencies in the world’s biggest producer Indonesia this week issued warnings of severe rains in some of its palm oil producing states, including Sumatra and Kalimantan.
Meanwhile, Malaysia maintained its February export tax for crude palm oil at 8% and lowered its reference price, a circular on the Malaysian Palm Oil Board website showed.
The Malaysian ringgit, palm’s currency of trade, was unchanged at 4.73 against the dollar. Dalian’s most active soyoil contract edged down 0.03%, while its palm oil contract was down 0.88%. Soyoil prices on the Chicago Board of Trade eased 0.23% after a 2.7% jump overnight. Palm oil is affected by price movements in related oils as they compete for a share of the global vegetable oils market. India’s sunflower oil imports are set to decline in coming months as a rally in prices driven by a surge in freight rates, is prompting buyers to shift to rival oils available at a discount, traders told Reuters. Oil prices were little changed on Tuesday as traders weighed a host of conflicting supply and demand worries, from rising tensions in the Middle East to cold weather woes disrupting production in the United States.
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