Malaysian palm oil futures rose for a second consecutive session, supported by concerns about lower output despite a weaker performance by rival vegetable oils on Thursday evening. Benchmark palm oil futures for January on the Bursa Malaysia Derivatives Exchange rose 0.6 percent to 2,774 ringgit ($663) a tonne at the end of the trading day.
Palm was down earlier in the day, tracking soyaoil and a stronger Malaysian ringgit, before reversing losses.
The ringgit rose 0.02 percent on Thursday. A stronger ringgit, the currency palm is traded in, usually makes the tropical oil more expensive for holders of foreign currencies.
"There are prevailing production worries, and the weather will come in play very soon," a Kuala Lumpur-based trader said, referring to year-end monsoon rains that could disrupt the palm-fruit harvest.
Lower output levels could reduce inventory levels in the world's second largest palm producer and support benchmark prices.
October data from government body the Malaysian Palm Oil Board will be released on November 10.
Prices were also supported by Malaysian plans to implement higher biodiesel mandates for the transportation and industrial sector from December 1, which would increase demand for palm oil as it is used as a component of biodiesel.
The so-called B10 programme, which requires a minimum bio-content of 10 percent in biodiesel for the transport sector, will be rolled out in phases beginning with Johor state, according to an email sent by the Malaysian Palm Oil Board to industry participants and seen by Reuters.
The B7 programme for the industrial sector will start nation-wide on the same day.
Full implementation of the B10 programme would consume 750,000 tonnes of oil palm a year, Malaysia's minister of plantation industries and commodities said earlier this year.
In related vegetable oils, the December soyabean oil contract on the Chicago Board of Trade fell 0.3 percent on Thursday, while the January soyabean oil contract on China's Dalian Commodity Exchange was down 0.3 percent.
The January contract for palm olein on China's Dalian Commodity Exchange gained 0.2 percent.