KUALA LUMPUR: Malaysian palm oil futures rose on Monday, as rival edible oils and global markets rebounded from a tumble stoked by worries of the new Omicron coronavirus variant last week.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange gained 57 ringgit, or 1.18%, to 4,906 ringgit ($1,157.89) a tonne by the midday break.
"After a slump in broader markets on Friday, commodities and other instruments are trying to stabilise and waiting for the assessment of actual risk to the demand and other aspects due to the spread of the new variant," said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
The Omicron variant has spread around the world, prompting Japan to close its borders to all foreigners and Australia to review plans to re-open to skilled migrants, even as more countries imposed travel restrictions to rein in the spread of the coronavirus.
Additional measures could cause more volatility in financial and commodity instruments going forward, Bagani added.
Oil prices rose as investors looked for bargains amid speculation that OPEC+ may pause an output increase in response to Omicron's spread, making palm a more attractive option for biodiesel feedstock.
Dalian's most-active soyoil contract fell 0.5%, while its palm oil contract lost 0.8%. Soyoil prices on the Chicago Board of Trade were up 1.2%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Deep negative import margins and palm oil's narrow spread over competing edible oils have evaporated fresh buying in destination markets, Bagani said, adding, it could hurt optimism for Malaysia's exports in December if this persists.
Palm oil may revisit its Nov. 9 low of 4,706 ringgit per tonne, Reuters technical analyst Wang Tao said.
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