Malaysian palm oil futures ended higher on Wednesday as prices tracked rival oils on China's Dalian Commodity Exchange and production data released was within traders' expectations. Benchmark palm oil futures for January on the Bursa Malaysia Derivatives Exchange trended higher by 1.23 percent at 2,794 ringgit ($671.80) a tonne at the close.
Traded volumes stood at 47,125 lots of 25 tonnes each at noon. A Kuala Lumpur-based trader said the tropical oil rose in tandem with price gains on the Dalian. "Prices are up, tracking the strong movement on Dalian. And production did not rise as much, which people already expected," he said. The January soyabean oil contract on the Dalian climbed as much as 0.5 percent and the January contract for palm olein on the same exchange was up as much as 1 percent.
In another related vegetable oil, Chicago Board of Trade's December soyabean oil rose as much as 0.53 percent. Palm oil is impacted by movements of related vegetable oils as they compete for a share in the global edible oils market. A second trader said that although output data released today showed an increase in production, the numbers did not spur selling by traders.
"The market had expected output to be lower but while the data showed an increase, it was marginal. Generally, production for the year is expected to be low," he said. Southern Palm Oil Millers Association released data noting a 2.83 percent increase in production for the October 1-25 period. Leading analysts said at a recent industry conference that output was expected to fall this year due to a lingering impact of the crop-damaging El Nino weather pattern.
The futures contract surged to a more than two-year high of 2,822 ringgit on Monday, on lower output data and tracking the uptrend in Chinese vegetable oils, which also rose to its highest levels in about two years. Reuters market analyst for commodities and energy technicals Wang Tao said palm oil may retest resistance at 2,822 ringgit per tonne, as it has steadied around support at 2,753 ringgit.