Malaysian palm oil futures snapped a losing streak to rise for the first time in seven sessions, as traders short-covered the market and official data showed declines in November's production. The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange rose 0.6 percent at 2,473 ringgit ($606.57) a tonne on Tuesday evening.
Palm had shed 5.5 percent in the previous six sessions, hitting a five-and-a-half month low of 2,455 ringgit on Monday evening. Trading volumes stood at 47,419 lots of 25 tonnes each at the end of the trading day.
"The market is seeing some short-covering now, bearish views have already been priced in," said a futures trader from Kuala Lumpur, referring to earlier expectations of rising stockpiles at end-November and falling demand. Data released during the midday break showed that Malaysia's palm oil stocks at end-November rose 16 percent from a month earlier to a two-year high of 2.56 million tonnes.
The sharp rise in inventories comes on the back of weaker-than-forecast exports. Shipments fell 11.9 percent to 1.35 million tonnes, while production declined 3.3 percent to 1.94 million tonnes. Another trader added that the market viewed the drop in production as supportive as "it suggests peak output has passed".
Palm oil production typically peaks in the third quarter of the year before tapering off at year-end and into the first quarter of the following year. In other related oils, the January soyabean oil contract on the Chicago Board of Trade was slightly down 0.03 percent, while the January soyabean oil contract on the Dalian Commodity Exchange rose 0.5 percent.
The Dalian January palm olein contract dipped 0.03 percent. Palm oil prices are affected by other edible oils as they compete for a share in the global vegetable oils market.
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