Palm oil reverses losses, jumps over 2% on declining production

SINGAPORE: Malaysian palm oil futures reversed earlier losses to jump more than 2% higher on Monday, as palm production fell more than 10% in July, traders say.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange rose 113 ringgit, or 2.7%, to 4,384 ringgit ($1,036.41) a tonne, after falling to 4,205 ringgit earlier in the session.

The contract rose due to lower production in July, two Kuala Lumpur based traders told Reuters.

Production is expected to fall 10.8% in July 1-20 compared with the same period a month earlier, one of the traders said.

Capping the gains however, were weak soybean futures on the Chicago Board of Trade, which hit a two-week low as updated weather models called for more favourable weather in the coming weeks, easing concerns over crops.

Palm oil targets 4,344 ringgit

Its soybean oil contract was last down 0.4%.

Meanwhile, Dalian's most-active soyoil contract tracked Malaysian palm to rise 0.7%, while its palm oil contract gained 2.2%.

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

Softer export data for July 1-25 also limited some gains. Shipments fell 4% compared to the same period a month earlier, data from independent inspection company AmSpec Agri showed on Monday.