Malaysian palm oil futures rose on Monday after two straight sessions of losses, as data from an industry body showed lower January output in the world's second-biggest producer of the tropical oil. However, brokers and traders told Reuters that prices could fall below 2,500 ringgit over coming weeks if the spread of a deadly coronavirus in China continues to disrupt travel and normal activity in the world's second-largest palm oil importer.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 0.6% to 2,620 ringgit ($637.08) per tonne. It fell nearly 9% last week on fears that the coronavirus epidemic would curb demand from China. Lower production in Peninsular Malaysia is supporting the market, two Kuala Lumpur-based traders said.
Palm oil production in January fell 4.3% from a month earlier, data from the Peninsula Palm Oil Millers' Association showed. Soyaoil and palm oil on China's Dalian Commodity Exchange fell 7% each as markets there resumed trading after the Lunar New Year holiday was extended to help contain the flu-like virus that has killed 361 people so far.
Palm oil is generally affected by price movements in related oils as its competes for a share in the global vegetable oil market. Soyabean on the Chicago Board of Trade last rose 0.1%. Palm oil may retest a support at 2,592 ringgit per tonne, a break below which could cause a fall into a range of 2,435 ringgit to 2,513 ringgit, Reuters analyst Wang Tao said.