The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange was up 4.2% at 2,282 ringgit per tonne at the close, charting its largest intraday gain in almost four years.
"Overnight soybean oil supported Dalian futures, which in turn lifted palm today," said a Kuala Lumpur-based trader, referring to the Chicago Board of Trade (CBOT) soybean futures. The trader added that a weaker ringgit also helped palm.
The January soyoil contract on Dalian rose 1.7%, while the Dalian January palm oil contract climbed 2.6%. The ringgit slipped 0.43% against the U.S. dollar to its lowest since Sept. 6. Palm oil prices rise when the ringgit weakens, as the vegetable oil becomes more attractive to holders of foreign currencies.
Palm oil may rise to 2,406 ringgit per tonne as it could have resumed its uptrend from the July 10 low of 1,916 ringgit, said Wang Tao, a Reuters market analyst for commodities technicals.
The Indonesia Palm Oil Association said on Tuesday that its palm oil production is expected to rise at a slower pace this year, by about 6.3% percent from 47.6 million tonnes a year earlier.
Palm oil inventories in Indonesia and Malaysia, the top two producers of the tropical oil, have also dropped. Indonesia said on Tuesday inventories reached 3.51 million tonnes at end-July, compared with 3.55 million tonnes a month earlier.
In Malaysia, palm oil stockpiles hit a 13-month low at the end of August as strong export gains outpaced production increases, official data showed last week. In other related oils, U.S. soyoil futures were last down 0.7%. - Reuters
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