Malaysian palm oil rose more than 1% on Monday, recovering from the previous session's sharp fall, supported by concerns over shortfall in supplies and tracking gains in rival soyaoil prices. The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed up 33 ringgit, or 1.2%, at 2,878 ringgit ($690.17). It fell 1.3% on Friday on profit-taking and a stronger ringgit.

Palm prices have rallied about 35% over the past two months, hitting their highest since February 2017 on December 11. "Prices declined on Friday in response to Malaysia's export tax increase but rebounded on higher soyaoil prices on the Chicago Board of Trade," said a Kuala Lumpur-based trader.

Malaysia, the world's second-largest producer and exporter of palm oil, raised its export tax for crude palm oil for January, for the first time in one-and-a-half years, the Malaysian Palm Oil Board said on Friday. Malaysia calculated a reference price of 2,571.16 ringgit ($616.59) per tonne for next month.

Poor rainfall in top producers Indonesia and Malaysia earlier this year is likely to curb yields of the tropical oil in the first half of 2020, according to traders and analysts. Malaysia's palm oil inventories fell to a three-month low in November due to a seasonal decline in production, while exports dropped on slowing purchases by top importers. However, the decline was slower than expected.

Exports of Malaysian palm oil products during Dec. 1-15 fell between 17.3% and 18.6% from a month earlier, data from cargo surveyors showed. Dalian's most-active soyaoil contract traded 0.03% lower, while the palm oil contract fell 0.6%. Soyaoil prices on the Chicago Board of Trade rose 1.2%.

US soyabeans rose around 1% to a one-month high as Washington and China cooled their trade war by committing to a deal that sees China buying large amounts of North American agricultural products. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.