KUALA LUMPUR: Malaysian palm oil futures inched higher on Thursday, tracking an overnight jump in rival soyoil, although gains were checked by a survey signalling an improvement in palm oil output in the world's second-largest producer.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained 42 ringgit, or 0.77%, to 5,475 ringgit ($1,308.87) a tonne by the midday break.
The market recovered from Wednesday's low on strong palm fundamentals and supported by bargain buying, with crude prices sharply off morning lows, a Kuala Lumpur-based trader said.
Uncertainties over the Russia-Ukraine standoff should keep the market cautious and may limit a sharp bounce in palm oil, she said.
Palm ends lower as survey points to improving production
Oil recovered some of its more than 2% fall after Russian-backed rebels in eastern Ukraine accused Kyiv government forces of shelling their territory with mortars.
Higher crude prices make palm a more attractive option for biodiesel feedstock.
Palm oil fundamentals have been positive so far this month. Cargo surveyors said Feb. 1-15 exports surged between 11% and 24% month-on-month, while a millers' association pegged a 0.46% uptick in production.
Malaysia has maintained its March export tax for crude palm oil at 8% and raised its reference price.
In related oils, Chicago soyoil prices fell 0.4%, after rallying 2% overnight on concerns that forecast rain may be insufficient to avert further drought damage to crops in Argentina and southern Brazil.
Dalian's most-active soyoil contract rose 1.2%, while its palm oil contract gained 0.7%.
Palm oil may bounce again to a resistance at 5,558 ringgit per tonne before retesting a support at 5,425 ringgit, Reuters technical analyst Wang Tao said.
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