KUALA LUMPUR: Malaysian palm oil futures extended early gains on Tuesday, hitting their highest levels in 18 days, as traders covered positions following a surge in crude prices.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange gained 57 ringgit, or 1.47%, to 3,941 ringgit ($894.46) a tonne by the midday break.
Palm oil rose for a second day to its highest since March 17.
The contract jumped 3.3% on Monday, tracking a spike in crude prices after the OPEC+ group jolted markets with plans to cut more production.
“The surprising move by OPEC+ to cut production added with USDA planting intentions, which came in at the low-end saw short covering in the market,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Traders are also cognizant of the fact that the production will increase in the second quarter and with muted interest from China, the situation looks rather precarious assuming India shows signs of slowing down, he added.
Exports of Malaysian palm oil products for March rose 24.7% to 1,411,707 tonnes from 1,131,939 tonnes shipped in the prior month, cargo surveyor Societe Generale de Surveillance said on Monday.
Dalian’s most-active soyoil contract gained 0.9%, while its palm oil contract rose 1.3%.
Palm posts biggest jump in two months after crude oil rally
Soyoil prices on the Chicago Board of Trade were up 0.2%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may gain further to 3,963 ringgit per tonne, as it has broken a resistance at 3,853 ringgit, Reuters technical analyst Wang Tao said.
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