KUALA LUMPUR: Crude palm oil (CPO) futures on Bursa Derivatives jumped the most in 11 years on Wednesday after sharp losses in the previous session, helped by expectations of lower output.
However, fears over the fast-spreading coronavirus capped the gains.
The benchmark palm oil futures contract for April delivery rose as much as 9.1% in early trade.
However, the contract pared some gains and closed 5.8% higher at RM2,723 per tonne.
The market is correcting after the tumble on Tuesday, a Kuala Lumpur-based trader told Reuters.
"How far the recovery can go, though, we don't know. We have to see when markets in China open," he added.
Palm oil trader David Ng told Bernama that the firmer CPO price was also supported by the strong overnight soya bean oil performance and higher crude oil prices.
"We locate support at RM2,650 per tonne and resistance level at RM2,780 per tonne,” he said.
CPO prices dropped 10% on Tuesday in their biggest drop in over a decade, as the death toll from the virus rose sharply in China and some health experts questioned whether Beijing can contain the virus which has spread to more than 10 countries, including France and the United States.
China's Dalian Commodity Exchange is closed for the Lunar New Year holidays and will open on Feb 3.
CPO prices were also seeing some support from likely lower production in January, two traders told Reuters.
Dry weather and lower fertiliser use, a move adopted by some growers to cut costs, reduced output last year are likely to lead to lower production this year.
A 1.7% jump in soyoil prices on the Chicago Board of Trade also lent some support to palm oil.
Did you find this article insightful?
75% readers found this article insightful