KUALA LUMPUR, Nov 8 (Reuters) - Malaysian palm oil futures reversed early losses on Monday, but weakness in rival oils in anticipation of higher global edible oil supplies capped the gains.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange closed 15 ringgit, or 0.31%, higher at 4,895 ringgit ($1,177.25) a tonne.
Palm oil had earlier fell as much as 2.4%.
A Reuters poll on Friday pegged Malaysia’s palm oil stockpiles at end-October to rise 3.4% to 1.81 million tonnes, due to a plunge in exports and shrinking output.
However, stockpiles may rise more than expected as the Malaysian Palm Oil Association (MPOA) estimated October production likely rose 1.7% from the previous month, according to traders.
MPOA’s forecast came as a surprise as the market was expecting a slight decline in production due to labour shortage, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
The Malaysian Palm Oil Board is scheduled to release official data on Wednesday. “Meanwhile, due to the persistent higher prices and narrowed down spread over soft oils, palm oil is now experiencing a lack of destination demand at the moment,” Bagani said.
Demand is expected to ease as winter approaches in key markets India, China and Pakistan, he added.
Importers usually switch to other edible oils during winter as palm oil solidifies at lower temperature.
Rival soybean prices on the Chicago exchanges have been pressured by strong planting progress in South America and expectations for the US Department of Agriculture to raise its upcoming U.S harvest forecasts.
Soyoil prices on the Chicago Board of Trade gained 0.94%, after declining 1.3% in the previous session. Dalian’s most-active soyoil contract and its palm oil contract fell 2.3% each.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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