Malaysian palm oil futures jumped over 2% on Tuesday on hopes of a recovery in demand from China and India, following the ouster of prime minister Mahathir Mohamad, whose criticisms about India had soured palm oil trade with the country.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange rose 57 ringgit, or 2.41%, to 2,377 ringgit ($565.41), its second straight session of advances.
Chinese demand has been rising since last Friday as Malaysian palm olein is at a $7.50 discount to Indonesian crude palm oil, Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur, said. March and April exports are also expected to rise as Ramadan demand picks up, Cultrera added.
The market has been under pressure by worries of global demand of the edible oil dropping as the coronavirus spread to countries outside of China, including South Korea, Italy, Iran and Japan.
But a fall in daily new cases in China, the second largest palm oil buyer after India, has raised hopes of a return of Chinese demand, Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker, said. The market is also hopeful of India resuming purchases from Malaysia after the second largest producer appointed a new prime minister, traders said. Elsewhere, Dalian's most-active soyaoil contract was up 0.28%, while its palm oil contract fell 1.04%. Soyaoil prices on the Chicago Board of Trade rose 1.48%.
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