KUALA LUMPUR: Malaysian palm oil futures reversed course to edge higher on Wednesday as data showed lower production figures, implying tighter supplies.
The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange rose to its highest since January 2018 on Tuesday, but closed lower after traders locked in profit.
The contract for January delivery stood at 2,562 ringgit ($620) per tonne, up 1.9 per cent at the close on Wednesday.
“Fresh data showed declining production, which pushed prices higher again,” a Kuala Lumpur-based trader said. The Southern Peninsular Palm Oil Millers Association shared data with traders earlier in the day, noting that production for the first five days of November dropped 21.3pc.
Another trader said the market was likely to remain firm for the time being also due to better demand from China and increased usage of palm oil in biofuels beginning next year.
Top industry analysts have raised their price outlook, expecting higher demand for palm in biodiesel and an output slowdown.
Published in Dawn, November 7th, 2019