Malaysian palm oil futures edged higher during Monday trade, charting a second session of gains in three days, bolstered by strength in related edible oils and expected weaker output. The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange rose 0.6 percent to 2,286 ringgit ($559.88) a tonne by the close. Trading volumes stood at 26,316 lots of 25 tonnes each at the end of the trading day.
"Palm's gain is due to supportive external markets, while production figures are also negative," said a Kuala Lumpur-based trader, referring to declining output indicated by data from a millers association. Palm oil production usually declines during the first quarter of the year in line with seasonal trends. Monthly output in February is also expected to fall from the previous month because there are fewer working days.
Output in Malaysia, the world's second-largest producer and exporter, fell 3.9 percent to 1.74 million tonnes last month, data from the Malaysian Palm Oil Board showed. Malaysian palm oil prices are set to hold steady in 2019 at an average of 2,303 ringgit a tonne, according to estimates by the Malaysian Palm Oil Council (MPOC) on Monday, while global output of the tropical oil is expected to rise by 3 million tonnes.
Malaysian output would rise to 20.2 million tonnes in 2019, while Indonesian production is pegged at 42.8 million tonnes, the MPOC said. In related oils, the May soyaoil contract on the Dalian Commodity Exchange rose 0.8 percent while the Dalian May palm oil contract added 0.3 percent The US Chicago Board of Trade is closed on Monday for a national holiday.
Palm oil prices are affected by movements in soyaoil, which competes for a share of the global vegetable oil market. Palm oil is biased to break a resistance at 2,285 ringgit a tonne and rise towards the next resistance at 2,316 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
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