Malaysian palm oil futures hit their highest in two years and eight months in early trade on Tuesday, as concerns of declining output and stronger soyaoil supported prices. Benchmark palm oil futures for January on the Bursa Malaysia Derivatives Exchange rose 1.9 percent at 2,843 ringgit ($677) a tonne at the close of trade. It earlier touched 2,863 ringgit, its strongest level since March 2014. Traded volumes stood at 53,195 lots of 25 tonnes each.
"The market is really bullish because of the data," said a futures trader based in Kuala Lumpur, citing a 3.7 percent decline in October output from the month before, based on numbers from the Malaysian Palm Oil Association. Traders said that stronger soyaoil on China's Dalian Commodity Exchange and the Chicago Board of Trade also helped lift palm's prices. Palm's performance is impacted by soyaoil, as they both compete for a share in the global vegetable oils market.
The December soyabean oil contract on the Chicago Board of Trade was up 1.8 percent, while the January soyabean oil contract on China's Dalian Commodity Exchange gained 2.1 percent. Official palm data for the month of October will be released on November 10 by industry regulator the Malaysian Palm Oil Board. A Reuters survey of eight planters, traders and analysts showed lower-than-average production growth due to lagging effects of El Nino.
October production is seen rising by 1.1 percent to 1.73 million tonnes from the previous month, while inventories are projected to gain 8.8 percent to 1.68 million tonnes. In other related oils, the January contract for palm olein on China's Dalian Commodity Exchange rose 3.3 percent.
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