Malaysian palm oil futures rose for a fourth consecutive day, as traders expected improving Chinese demand and lower December production. The benchmark palm oil contract for March on the Bursa Malaysia Derivatives Exchange gained 0.7 percent to close higher at 2,486 ringgit ($577.20) a tonne.
"We should be moving into strong demand coming from China because of their festival season in early February. Demand will pick up slowly but surely," said a Kuala Lumpur based trader, referring to the Chinese new year festive celebrations. "December's production should also drop sharply, and traders don't want to take up short positions over the span of the long holidays."
Traded volume stood at 30,267 lots of 25 tonnes each at the end of the day. Palm exports from Malaysia, the world's second largest producer, have dipped as consumption in China and India, Asia's top consumers of palm oil, wanes. Shipments fell about 25 percent from December 1-20 compared with the same time a month ago, according to cargo surveyors data. Output from Malaysia is expected to fall in December, in line with a seasonal trend, from a record high of 2.9 million tonnes a month ago. A dent in inventories will help boost palm prices, which have been capped partly due to abundant supplies. In competing vegetable oil markets, the US January soyoil contract gained 0.7 percent, while the May soybean oil contract on the Dalian Commodity Exchange lost 0.04 percent.