SINGAPORE: Malaysian palm oil futures closed at a five-week high on Tuesday, rebounding from two days of decline amid supply concerns and inclement Indian weather prompting higher imports of edible oils. The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange rose 51 ringgit or 1.3% at 3,989 ringgit ($842.81) a metric ton, its highest since Jan. 29. Malaysia’s palm oil stocks are expected to drop below 2 million tons for the first time in six months at the end of February, with output likely to drop for a fourth consecutive month, a Reuters survey showed on Monday.

Global exchange operator CME Group said top palm oil producer Indonesia’s domestic biodiesel mandate could further strain global supply, supporting prices in 2024. Malaysia’s plantation and commodities minister told an industry conference the country expected strong demand for palm oil from key markets such as India and China this year.

China will spend 140.63 billion yuan on stockpiling grain, edible oils and other materials this year, up 8.1% from 2023, while also expanding oilseed crop production to enhance food security. Meanwhile, untimely rainfall and hailstorms have battered winter-sown crops, including rapeseed, in India. Lower-than-expected rapeseed production may force the world’s biggest edible oil importer to continue expensive purchases.

India’s palm oil imports in February previously plunged to their lowest levels in nine months, five dealers told Reuters on Tuesday. Dalian’s most-active soyoil contract increased 0.24%, while its palm oil contract gained 0.21%. Soyoil prices on the Chicago Board of Trade lost 0.42%.

Palm oil is affected by price movements in related oils as they compete for a share of the global vegetable oils market. The Malaysian ringgit, palm’s currency of trade, weakened 0.28% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.