KUALA LUMPUR: Malaysian palm oil futures rose on Wednesday to their highest closing in over a year, as strength in rival edible oils and firmer crude oil prices underpinned the market.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed up 67 ringgit, or 1.62%, to 4,196 ringgit ($895.43), its highest closing since March 9, 2023, when it exceeded the 4,200 ringgit mark.

The contract earlier logged a minor uptick, driven by the diminishing appeal of palm oil’s relative value to other edible oils, said Marcello Cultrera, director at Singapore-based commodities consultancy Apricus 8 Pte Ltd.

“Considering the anticipated rise in production (of palm oil), it appears that we are approaching a short-term price cap at the current market levels,” Cultrera said.

Dalian’s most-active soyoil contract gained 0.6% higher, while its palm oil contract added 1.02%. Soyoil prices on the Chicago Board of Trade were up 0.5%.

Palm oil hovering around 8-month highs as stronger rivals offset lower exports

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Oil rose on Wednesday, supported by signs of strong global demand including from top consumer the United States while hopes that the Federal Reserve might start cutting rates soon also buoyed sentiment despite somewhat sticky U.S. inflation.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

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.

Inventories at the end of last month fell 5% to 1.92 million metric tons from levels seen in January, crude palm oil production declined 10.18% to 1.26 million tons, while exports plunged 24.75%, data from industry regulator the Malaysian Palm Oil Board showed on Monday.

The Malaysian ringgit, palm’s currency of trade, fell 0.24% against the dollar, making the commodity less expensive for buyers holding the foreign currency.