Malaysian palm oil futures reversed course to rise in late trade on Tuesday, marking a third straight day of gains. Palm had slid earlier in the day due to a stronger ringgit, the currency palm oil is traded in, which strengthened by 0.4 percent against the dollar on Tuesday. A stronger ringgit usually makes palm more expensive for foreign currency holders.
The palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange gained 0.7 percent to reach 2,781 ringgit ($696) per tonne at the end of the trading day. It rose earlier to hit another new two-year high of 2,793 ringgit, the strongest since March 14, 2014. Traded volumes were 44,224 lots of 25 tonnes each, compared with a 2015 daily average of 44,600 lots.
"The uptrend could be technical ... late soybean oil gains added support," said a futures trader based in Kuala Lumpur. Palm has risen 4 percent since Thursday's close, over concerns that a drought cause by El Nino would impact fruit yields. The El Nino, which normally brings scorching heat across Southeast Asia, may lower Malaysia's annual palm output by 2 million tonnes in the year ending September 2016, said a leading industry analyst.
Malaysia is the world's second-largest palm producer after Indonesia. In competing vegetable oil markets, the May Chicago Board of Trade soyoil contract gained 0.9 percent, while the September soybean oil on the Dalian Commodity Exchange slipped 0.03 percent. Crude palm kernel oil's offer price rose to 5,506.02 ringgit per tonne, beating a previous five year high, according to price assessments by Thomson Reuters.
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