Malaysian palm oil futures rose marginally on Wednesday as lower production numbers stirred some interest despite slower buying from India capping the gains. The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 0.16 percent at 2,489 ringgit ($638.21) a tonne.
Trading volumes were robust, with 55,723 lots of 25 tonnes each during the first half. "The Indian rupee has fallen a lot, so buying power from India has reduced. The market is expecting India will not buy aggressively for now," a Kuala Lumpur-based trader said.
However, data from Southern Palm Oil Millers Association (SPPOMA) showing a 22.6 percent fall in production for the February 1-20 period, lent support. "There was some short-covering from traders who sold down on Tuesday," the trader added. Another trader said the market picked up after digesting the lower production figures from SPPOMA, and was boosted by a weakening in the ringgit.
A weaker ringgit usually makes palm oil more attractive for holders of foreign currencies. That said, he said the market was expecting higher production going forward. "Given the production recovery in January and February year-on-year, we are expecting higher production this year which will exert pressure on inventory," the trader said.
The market will take further cues from production data on Thursday, the traders said. The Chicago Board of Trade's March soyabean oil contract rose 0.03 percent. China's Dalian Commodity Exchange was closed for the Lunar New Year and will reopen on Thursday.
Palm oil prices are impacted by other rival edible oils as they compete for a share in the global vegetable oils market.
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