KUALA LUMPUR: Malaysian palm oil futures rose over 1 percent in first-half trade on Monday and touched a four-and-a-half-year high hit in the previous session, tracking gains in rival soyoil and on tight supplies in the market.
Benchmark palm oil futures for March delivery on the Bursa Malaysia Derivatives Exchange were up 1.3 percent at 3,201 ringgit ($715) a tonne at the midday break after rising to a high of 3,202 ringgit earlier in the session.
Traded volumes stood at 8,764 lots of 25 tonnes each at noon.
Palm has been on an upward trend in recent weeks, supported by a weaker ringgit and lower production due to the lingering effects of a crop-damaging El Nino and as year-end monsoon rains disrupt harvesting.
A weaker ringgit makes palm oil cheaper for holders of foreign currencies.
"(Chicago Board Of Trade) Soyoil prices moved up in the morning, and then Dalian followed the suit," said a futures trader based in Kuala Lumpur.
"Physical prices are also much higher than futures prices, indicting tight supplies in the market," he said, adding that demand from India was slowly increasing due to low stocks at ports there.
Palm oil demand from India, the world's largest consumer of vegetable oils, dropped nearly 36 percent in November from a month earlier, data from the Malaysian Palm Oil Board (MPOB) showed.
Malaysia's exports to India declined sharply last month as New Delhi's removal of high-value rupee notes from circulation disrupted trade in a cash-based economy and curbed demand.
The MPOB data also showed production fell 6.1 percent in November. Heavy rains and flooding throughout the month are forecast to hit output further in December.
Palm prices are also influenced by other vegetable oils as they compete for shares in the global edible oils market.
The January soybean oil contract on the CBOT was up 0.9 percent, while the May soybean oil contract on the Dalian Commodity Exchange rose 1.8 percent.
In related vegetable oils, the May contract for Dalian palm olein rose 0.8 percent.
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