KUALA LUMPUR: Malaysian palm oil closed higher on Friday, reversing earlier losses, as traders squared positions ahead of the weekend and as low stock levels supported the market.

Benchmark palm oil futures for January on the Bursa Malaysia Derivatives Exchange rose 0.2 per cent to 2,724 ringgit ($651.21) a tonne. They had dropped earlier to a three-week low. Traded volumes stood at 42,198 lots of 25 tonnes each. Prices gained 2.4pc for the week - the second straight week of gains.

“As long as stocks do not go up (fast), the market will not fall sharply, this is despite demand being low. There are no signs of stocks going up immediately so that will hold market,” a Kuala Lumpur-based trader said.

He added that production levels were expected to taper off, on an expected seasonal decline. Another trader said palm prices were also supported by positive sentiment around the Malaysian budget.

Malaysia’s Prime Minister Najib Razak on Friday courted voters with cash aid and subsidies and pledged to cut the country’s large fiscal deficit to keep the economy on a strong growth track.

Palm oil production in Malaysia, the world’s second-largest producer, is forecast to rise in 2017 by 5.6pc from this year on better yields and an expansion in matured areas, the government said on Friday.

Published in Dawn, October 22nd, 2016