KUALA LUMPUR: Malaysian palm oil futures rose on Tuesday for a second consecutive session, underpinned by better demand prospects after India slashed import taxes, although the gains were capped by higher supply outlook.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was up 46 ringgit, or 1.07%, at 4,364 ringgit ($1,051.82) a tonne by the midday break.
Buying activity is solely due to price adjustment between contracts as the September delivery contract expires tomorrow, a Kuala-Lumpur based trader said.
"Any higher rally is (being) curtailed by rising stocks and better production," he added.
Analysts see an uptick in stockpiles at the end of the month after the Malaysian Palm Oil Board last week reported a higher-than-expected 25% surge in end-August inventories and stronger production.
Top buyer India's demand for Malaysian palm oil is likely to improve this month after rival Indonesia raised its export duties, but any upside to prices will be limited by erosions in external edible oil markets, Refinitiv Agriculture Research said in a note on Monday.
India has also cut the base import taxes on palm oil, soyoil and sunflower oil ahead of Diwali festival as the world's biggest vegetable oil buyer tries to cool near-record price rises.
Refinitiv forecast the contract to rebound towards resistance levels at 4,360 ringgit-4,380 ringgit a tonne this week.
Dalian's most-active soyoil contract fell 0.4%, while its palm oil contract rose 0.2%. Soyoil prices on the Chicago Board of Trade were up 0.4%.
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 retest a resistance at 4,384 ringgit per tonne, a break above could lead to a gain at 4,439 ringgit, Reuters technical analyst Wang Tao said.