KUALA LUMPUR: Malaysian palm oil futures fell on Wednesday after scaling a near five-week peak in the previous session, though expectations of tightening supplies reined in losses.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange lost 82 ringgit, or 1.93%, to 4,171 ringgit ($948.39) a tonne.
The contract is tracking an overnight plunge in the US market, but likely lower supplies and fewer exports from Indonesia have reined in losses, a Kuala Lumpur based trader said.
Exports from top producer Indonesia are expected to soften this year after a ruling to protect domestic supplies reduced the overseas shipments quota.
Palm oil production will likely see seasonally weaker output for the first quarter due to shorter working days amid festive seasons and La Nina-induced wet weather conditions, Refinitiv Commodities Research said in a note.
“Looking ahead, palm oil prices in Q1 might point to more upside due to Indonesia’s rising biodiesel mandate and potentially tighter supplies,” Refintiv said.
India’s palm oil imports in December jumped 94% from a year earlier to a record high for the month as higher discount to rival vegetable oils led refiners to increase purchases during the seasonally weak winter period, five dealers said.
Dalian’s most-active soyoil contract fell 0.4%, while its palm oil contract gained 0.05%. Soyoil prices on the Chicago Board of Trade slipped 0.13 percent.
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