Palm hits over 2-month high on weak production outlook

KUALA LUMPUR: Malaysian palm oil futures rose to an over two-month high on Wednesday evening, charting a second straight day of gains, as traders forecast declining production in the coming months and improving export data.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange rose as much as 1.1 percent to 2,202 ringgit ($535.38) in the second half of trade, its highest level since Oct. 24, before easing some gains.

It ended the trading day up 0.2 percent to 2,183 ringgit a tonne.

Trading volumes stood at 36,824 lots of 25 tonnes each at the close of trade.

Palm prices were up on a seasonal basis, a Singapore-based trader said. "During January-March, production always goes down and prices go up," he said.

Expectations of monthly export gains were also supportive of the market, as demand in December was "quite low", said another trader.

Palm oil shipments from Malaysia, the world's second largest producer and exporter, edged up from the previous month to between 1.2 million tonnes (MT) and 1.3 MT in December, according to cargo surveyor data.

Cargo surveyors are expected to release export data for the Jan. 1-10 period on Thursday after 0300 GMT.

Exports are also expected to rise following India's decision to reduce import taxes on Southeast Asian palm oil.

India, the world's largest edible oil importer, had previously raised import duties on edible oils last year to support local prices.

In other related oils, the Chicago March soybean oil contract rose 0.6 percent, while the March soybean oil contract on the Dalian Commodity Exchange edged up 0.3 percent.

Meanwhile, the Dalian January palm oil contract jumped 2.5 percent.

Palm oil prices are impacted by changes in soyoil prices, as they compete for a share in the global vegetable oil market.