Palm jumps over 3pc as US soyoil rallies on Argentina strikes

SINGAPORE: Malaysian palm oil futures reversed course to jump over 3% on Wednesday, tracking gains in soyoil on the Chicago Board of Trade (CBOT) as labour strikes in Argentina entered 13th day.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed 3.6% higher, or 8 ringgit, at 3,536 ringgit ($870.72).

It had earlier fallen to as low as 3,394 ringgit.

Palm tracked higher prices of soyoil on the CBOT, up 2.2%, as Argentine soymeal exports stalled due to labour strikes.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Soyoil on the Dalian Commodity exchange rose 0.3%, while palm oil fell 0.3%.

The market was torn between expectations of weaker output and concerns about Malaysia's move to raise export taxes on the vegetable oil, leading to volatility in prices earlier in the session.

"Crude palm oil futures are trying to balance the Malaysian palm oil export tax increase, lower production and higher exports," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.

Malaysia raised its January export tax for crude palm oil to 8% from 6.5% in December, a circular on the Malaysian Palm Oil Board website showed on Tuesday.

Meanwhile, supply of palm oil is likely to take a hit due to lower levels of replanting and unfavourable weather.

Malaysia's Dec. 1 to 20 exports of palm oil products rose 18.2% over the previous month, while major buyer China is expected to increase its imports of palm next year.