KUALA LUMPUR: Malaysian palm oil futures rose nearly 2 percent on Wednesday, tracking stronger rival oils on the Dalian Commodity Exchange and boosted by demand from China.
A 6.4 percent fall in November output and forecasts of a further decline in production in January contributed to the gains.
Benchmark palm oil futures for March delivery on the Bursa Malaysia Derivatives Exchange were up 1.7 percent to 3,133 ringgit ($701) a tonne at the close of trade, the biggest daily gain since Jan. 3.
Traded volumes stood at 55,704 lots of 25 tonnes each on Wednesday evening.
"Dalian is showing a lot of strength today," said a futures trader based in Kuala Lumpur.
Stronger export figures and weaker production forecasts in January aided the gain, said another trader.
Palm oil shipments from Malaysia, the world's second-largest producer, rose 8-10 percent in the first ten days of the month versus the corresponding period in December.
Cargo surveyor data showed the rise in exports was led by demand from China as it replenishes its palm oil stocks ahead of the Lunar New Year celebrations, which leads to a higher intake of the tropical oil for cooking.
Palm oil may retest a support at 3,089 ringgit per tonne, according to analysis by Wang Tao, a Reuters market analyst for commodities and energy technicals.
Palm oil also tracks the movement of related vegetable oils, as they compete for a share in the global edible oils market. The May soybean oil contract on the Dalian Commodity Exchange rose 1.4 percent, while the May contract for Dalian palm olein gained 1.7 percent.
In other related oils, the March soybean oil contract on the CBOT was up 0.2 percent.
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