KUALA LUMPUR, Jan 6: Malaysian palm oil closed sharply higher on Monday after bullish crop estimates for December from forecaster Ivan Wong turned around a market spooked by losses in rival soyaoil.

The benchmark third-month March futures contract, down 20 ringgit at the midday break, did a 180-degree turn in the late session after the release of Wong’s report to close 27 ringgit up at 1,655 a ton.

Traders said the contract could test the 1,675-1,680 range in the near term. Volume was a staggering 7,934 lots — one of the highest in weeks.

Futures took a beating at the open due to the drop in prices of soyaoil at the close of the Chicago market on Friday.

Rumours that palm oil exports for the first 10 days of January were lagging from the same period of December also led to a sell-off, traders said.

But Wong’s report, issued at the start of the market’s afternoon session, sparked a frenzy of buying after he slashed production estimates for crude palm oil in December.

Production of CPO and leftover stocks of palm oil after each month’s exports are major factors for the market’s fundamentals, invariably resulting in bearish prices if the figures are high.

Traders said given the rumoured drop in exports on Monday, Wong’s estimate of a 13.2 per cent drop in December output was a relief to the market.

Wong had also put end-December stocks at 1.13 million tons, down from the official 1.23 million tons at end-November.

“It was just the thing that the market needed on a day like this,” said a trader.

Prices of physical crude palm oil also swung up in the late session, influenced by futures.

Physical CPO for both January and February was offered by sellers at 1,675 ringgit a ton — up 30 ringgit from Friday.

Bids peaked at 1,665 ringgit.

The contracts were traded at 1,660 to 1,665 ringgit in the southern and central regions.—Reuters