Malaysian palm oil futures extended gains on Tuesday, in line with rival oils, as prices were bolstered by supply concerns after Malaysia suspended some plantation operations to contain the coronavirus outbreak. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed up 62 ringgit, or 2.71%, to 2,351 ringgit ($530.94) per tonne.
The contract rose as high as 4% during the session following reports that Malaysia's largest palm oil producing state, Sabah, will suspend some plantation and factory operations until March 31 after several workers tested positive for the virus.
Palm also gained on short-covering due to the strength in the soyabean complex and Dalian prices, a Kuala Lumpur-based trader said. Dalian's most-active soyaoil contract gained 1.55% and its palm oil contract jumped 4.14%. Soyaoil prices on the Chicago Board of Trade also traded up 0.99%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Meanwhile, Asian stocks rallied, while crude oil futures climbed 5% on hopes that the United States ramps up economic support measures to ease the impact of the coronavirus outbreak. Stronger crude oil futures make palm a more appealing option for biodiesel feedstock.
A recent heavy slump in palm oil demand is expected to persist through the first half of 2020 as more countries impose lockdowns to contain the coronavirus outbreak, the Malaysian palm oil industry regulator told Reuters.
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