Malaysian palm oil futures recouped earlier losses to rise 1 percent on Friday, tracking strength in crude oil prices. Palm had been down at the midday break as concerns over rising inventory levels weighed on the market.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed up 1 percent at 2,172 ringgit ($525), after touching an intraday high of 2,178 ringgit. Palm gained 2.4 percent this week, charting a third weekly gain in four. Trading volumes totalled 28,197 lots of 25 tonnes each.
"Palm rose tracking crude oil," said a futures trader in Kuala Lumpur, as the vegetable oil is used as feedstock to make biodiesel. Oil prices rose by more than 1 percent on Friday, shaking off earlier losses, after China said it would hold talks with the US government on Jan. 7-8 to look for solutions to a trade dispute between the world's two biggest economies.
China and the United States are scheduled to hold vice ministerial level trade talks in Beijing, China's commerce ministry said in a statement on its website. Palm was down earlier in the day over concerns of rising inventory levels in Malaysia, the world's second-largest producer and exporter.
Malaysia's palm oil stocks are expected to rise 4.3 percent from the previous month to 3.14 million tonnes, a 19-year high, for end-December, according to a Reuters survey. The poll also showed December exports are expected to have risen 4.7 percent from the previous month to 1.44 million tonnes, while production is likely to have declined 3.6 percent to 1.78 million tonnes.
Industry regulator the Malaysian Palm Oil Board (MPOB) will release production, exports and inventory data for December next Thursday. Malaysian stockpiles at end-November had climbed 10 percent to 3 million tonnes, the highest in at least 18 years.
In other related oils, the Chicago March soyabean oil contract rose 0.8 percent, while the January soyabean oil contract on the Dalian Commodity Exchange jumped 2.1 percent. Meanwhile, the Dalian January palm oil contract gained 1.3 percent. Palm oil prices are affected by changes in soyaoil prices, as they compete for a share in the global vegetable oil market.