KUALA LUMPUR: Malaysian palm oil futures settled higher on Thursday, underpinned by lower production levels, although persisting concerns over demand from key importing countries capped gains.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained 52 ringgit, or 1.16%, to 4,533 ringgit ($1,022.10) a metric ton at the close. The contract had fallen 2.98% in the last three sessions.
“The palm oil market appears to be quite resilient despite the sell-off due to global market uncertainty over tariffs as production has not picked up even in March, while demand still remains a concern,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“Even if production does pick up in the second half of the year, it will probably be a gradual one, sans any significant jump. Next week onwards, the Malaysian Meteorological Department has also come out with an advisory that heavy rains will fall, and this may continue to disrupt production,” Supramaniam said.
Dalian’s most-active soyoil contract rose 1.68%, while its palm oil contract added 1.18%. Soyoil prices on the Chicago Board of Trade (CBOT) gained 0.19%.
Malaysian palm oil futures range-bound
Palm oil tracks prices of rival edible oils as it competes for a share of the global vegetable oils market.
Oil prices were largely steady on Thursday after surging in the previous session on a larger-than-expected draw in U.S. gasoline stocks, as markets weighed macroeconomic concerns against firm near-term demand expectations.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, weakened 0.2% against the dollar, making the commodity cheaper for buyers holding foreign currencies.
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