Malaysian palm oil futures reversed earlier losses to close over 2 percent higher on Monday, as official data showed falling output for the first time in five months. Data from industry regulator the Malaysian Palm Oil Board (MPOB) showed stocks last month rose 10.5 percent from October to 3.007 million tonnes, while production in November slid 6.09 percent from the previous month to 1.85 million tonnes.
Exports fell 12.9 percent to 1.375 million tonnes. The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was up 2.2 percent to 2,042 ringgit ($490.39) a tonne at the close of trade, its strongest daily gains since Nov. 28.
Palm earlier hit a one week high of 2,049 ringgit. Trading volumes stood at 34,798 lots of 25 tonnes each for the day. "The 3 million stocks has been factored in and now production was down 6 percent," said a Singapore based trader, referring to the MPOB data. "The seasonal slowdown in production will start now."
Palm oil production typically falls in line with seasonal trend at the year end, helping to reduce inventory levels. Another trader added the market was seeing a technical rebound after trading at three year lows. In other related oils, the Chicago December soyabean oil contract was down 0.1 percent, while the January soyabean oil contract on the Dalian Commodity Exchange fell 2.3 percent.
Meanwhile, the Dalian January palm oil contract declined 0.9 percent. Palm oil is impacted by movements of other edible oils, as they compete for a share in the global vegetable oil market. A bearish target range of 1,956-1,972 ringgit per tonne has been aborted for palm oil, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
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