Palm oil climbs 2pc on firmer soyoil, weaker ringgit

• The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed up 64 ringgit, or 2.3pc, to 2,902 ringgit.
• Palm oil fell 9.5pc last week, its largest weekly decline since November 2008.
• Palm oil is affected by price movements in related oils as it competes for a share of the global vegetable oils market.

KUALA LUMPUR: Malaysian palm oil futures rose 2pc on Monday after falling sharply last week, as rival soybean oil prices firmed and the ringgit weakened but worries about demand from top edible oil buyer India persisted.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange closed up 64 ringgit, or 2.3pc, to 2,902 ringgit ($714.87), its biggest jump in six sessions.

Palm oil fell 9.5pc last week, its largest weekly decline since November 2008, dragged down by India's import restrictions on the refined product and an export tax hike.

The market opened higher on Monday but sentiment was not too bullish due to the "absence of Indian buying, indications of more than anticipated recovery in production, and reduction in export pace", said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.

He said a sudden change in the production and export scenario raised concerns whether palm oil stocks would fall below 2 million tonnes at the end of January.

Malaysia's Jan. 1-20 palm oil exports fell between 7.4pc and 9.9pc from the month before, cargo surveyors said.

India, the world's largest edible oil buyer, has restricted imports of refined palm oil and informally instructed traders to avoid purchases from Malaysia following a diplomatic spat.

However, higher biodiesel demand in top suppliers Malaysia and Indonesia and expectation of supply tightness in the first half of 2020, have provided support to prices.

"The absence of any fresh bullish news, the ongoing India-Malaysia dispute and the Lunar New Year holiday in China next week are likely to put some pressure on Malaysian palm oil," Anilkumar said.

Dalian's most-active soyoil contract inched up 0.4pc, while its palm oil contract slid 0.3pc. Soyoil trading on the Chicago Board of Trade was closed due to a market holiday, but its prices had climbed 1pc in the previous session.

Palm oil is affected by price movements in related oils as it competes for a share of the global vegetable oils market.

The ringgit, palm's currency of trade, fell 0.22pc against the dollar, making the edible oil cheaper for holders of foreign currency.