Malaysian palm oil futures reversed earlier losses to gain at the end of the trading day, supported by a correction and on strength in crude oil prices. The market had earlier been range trading, and was slightly down at the midday break ahead of a poll and an official data release for November.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange rose 0.9 percent at 2,017 ringgit ($486.61) a tonne at the end of the trading day, its strongest gains in a day since Nov. 28. It had risen as much as 1.8 percent to 2,037 ringgit in earlier trade.
Trading volumes stood at 42,059 lots of 25 tonnes each at the end of the trading day. "The market is recovering after seeing a big slump. Crude oil is also better," said a Kuala Lumpur-based trader. Palm oil prices are affected by crude oil movements, as the edible oil is used as feedstock to make biodiesel.
Oil prices rose more than 2 percent on Tuesday, extending gains ahead of expected output cuts by producer cartel OPEC and a mandated reduction in Canadian supply. Indonesia said last week it would temporarily remove a levy on palm oil to boost exports after a sharp drop in prices hit farmers. It is expected to take effect once the finance ministry issues the regulation.
In other related oils, the Chicago December soyabean oil contract fell 0.3 percent, while the January soyabean oil contract on the Dalian Commodity Exchange dropped 0.2 percent. Meanwhile, the Dalian January palm oil contract declined 0.5 percent. Palm oil is impacted by movements of other edible oils, as they compete for a share in the global vegetable oil market.
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