KUALA LUMPUR: Malaysian palm oil futures rose on Monday as inventories in the world’s second-biggest producer dipped to a seven-month low on declining production.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed up 39 ringgit, or 0.95%, to 4,133 ringgit ($882.93), the highest closing since July 24, 2023. The contract rose 3.1% last week, fuelled by tight supply and optimism over palm demand.

As the market had already factored in the low production figures, attention will now turn to March export data to see if Malaysian palm oil futures can hit the 4,200 ringgit range, a Kuala Lumpur-based trader said.

Malaysia’s palm oil stocks at the end of February dwindled to their lowest levels in seven months as production hit a 10-month low, offsetting the slowdown in exports, the industry regulator said on Monday.

Inventories at the end of February fell 5% from the previous month to 1.92 million metric tons, their lowest since July 2023, data from industry regulator the Malaysian Palm Oil Board (MPOB) showed.

Crude palm oil production declined 10.18% from January to 1.26 million tons, the lowest since April 2023, while palm oil exports plunged 24.75% to 1.02 million tons, MPOB said.

Dalian’s most-active soyoil contract gained 0.4%, while its palm oil contract added 0.23%. Soyoil prices on the Chicago Board of Trade were up 0.58%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. Oil prices extended last week’s losses on Monday on concerns about slow demand in China, although lingering geopolitical risk surrounding the Middle East and Russia limited the decline. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The Malaysian ringgit, palm’s currency of trade, rose 0.02% against the dollar, making the commodity more expensive for buyers holding the foreign currency.