KUALA LUMPUR: Malaysian palm oil futures extended early gains on Wednesday, after the ringgit weakened, and as concerns over lower production and better-than-expected exports underpinned prices.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange closed up 104 ringgit, or 2.17%, to 4,892 ringgit ($1,171.18) a tonne.
Palm oil output in Malaysia, the world's second-largest producer after Indonesia, is expected to decline as plantations enter a lower production period during the rainy season.
The Southern Peninsula Palm Oil Millers' Association (SPPOMA) estimated a 6.3% drop in Nov. 1-15 production from the month before, traders said on Tuesday.
"The production pattern shows declines and the same will be seen until the first quarter of 2022," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
"Overall fundamentals are supportive and prices will remain elevated until improvement is sighted in output both in Malaysia and Indonesia."
Exports of Malaysian palm oil products during Nov. 1-15 rose between 10% and 29% month-on-month, according to data released by cargo surveyors on Monday.
The ringgit, palm's currency of trade, fell 0.3% against the dollar, making the commodity cheaper for holders of foreign currencies.
Dalian's most-active soyoil contract rose 0.5%, while its palm oil contract gained 1.2%. Soyoil prices on the Chicago Board of Trade were up 0.9%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.