Palm higher as output rises more slowly than expected
KUALA LUMPUR: Malaysian palm oil futures rose nearly 2 percent on Tuesday, hitting their highest in nearly three weeks, as production rose more slowly than expected.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed 0.8 percent higher at 2,178 ringgit ($529.15) a tonne, having earlier risen as much as 1.7 percent to 2,197 ringgit, its highest since Dec. 20.
Trading volumes stood at 45,785 lots of 25 tonnes each.
"Production is seeing a lesser increase than expected, some updates also suggest a marginal decline," said a Kuala Lumpur-based futures trader, referring to output data from the Malaysian Palm Oil Association showing that December output rose 1 percent from the previous month.
A Reuters poll forecast Malaysian output to fall 3.6 percent to 1.78 million tonnes in December, while inventories are expected to rise to 3.14 million tonnes, the highest since January 2000.
Another physical trader said that exports were moving out of Malaysia following India's decision to reduce import taxes on Southeast Asian palm oil.