SINGAPORE: Malaysian palm oil futures rose for a second session on Tuesday, supported by supply concerns following top exporter Indonesia’s plan to suspend some existing export permits and after smaller Malaysian stockpiles forecasts.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 85 ringgit, or 2.21%, to 3,936 ringgit ($916.41) a tonne by the midday break. Malaysia’s palm oil inventories at end-January likely slipped 0.66% from December to a five-month low of 2.18 million tonnes as production plummeted, a Reuters survey showed on Monday.

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“We are witnessing a sudden sharp drop in production in Q1 of 2023, attributed to weather vagaries and public holidays,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari. “We don’t expect production to turn positive any time soon, probably only by H2 of 2023.” Providing further support to the market, top producer Indonesia said late on Monday it would review the ratio of its palm oil export quota amid rising prices of domestic cooking oil.

Senior cabinet minister Luhut Pandjaitan said Indonesia would suspend some existing palm oil export permits until the end of April as exporters had accumulated large quotas for shipments from late last year. Dalian’s most-active soyoil contract gained 0.77%, while its palm oil contract rose 1.76%. Soyoil prices on the Chicago Board of Trade were up 0.39%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. Palm oil may test a resistance at 3,980 ringgit per tonne, a break above which could lead to a gain to 4,093 ringgit, Reuters technical analyst Wang Tao said.