KUALA LUMPUR: Malaysian palm oil futures climbed to a six-week high in evening trade on Tuesday, charting a third session of gains in four, tracking overnight strength in U.S. soyoil and crude oil prices.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 1.3 percent at 2,477 ringgit ($624.64) a tonne at the end of the trading day for its largest percentage gain since May 14.
The market had hit an intraday peak of 2,485 ringgit, its highest since April 9.
Trading volume stood at 39,505 lots of 25 tonnes each by the close.
"Soyoil is up, and crude oil is trading at three-year highs," said one futures trader in Kuala Lumpur, adding that this encouraged more production of palm-based biodiesel.
Palm oil prices are affected by movements in crude oil because it is used as feedstock to produce biodiesel. Crude oil prices rose on Tuesday on concerns that Venezuela's output could drop further after a disputed presidential election and potential U.S. sanctions on the OPEC member.
Another trader said that expectations of lower palm oil production in May also supported benchmark prices.
Data from the Malaysian Palm Oil Board (MPOB) had showed that April output in the Southeast Asian country dipped by 1 percent to 1.56 million tonnes from a month earlier but was still the highest April level since 2015
Palm oil is also affected by movements in rival edible oils that compete in the global vegetable oils market.
The Chicago July soybean oil contract jumped 1.4 percent on Monday, tracking rallies in soybean prices after the United States and China agreed to drop tariff threats as they work on a wider trade agreement.
Soyoil was up 0.7 percent at about 1100 GMT on Tuesday.
In other related oils, September soybean oil on China's Dalian Commodity Exchange fell 0.2 percent, while the Dalian September palm oil contract was trading flat. - Reuters
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