Malaysian palm oil futures closed higher on Wednesday, snapping two straight sessions of losses, supported by higher demand, a soyoil rally and the possibility of lower production in June.

The benchmark palm oil contract FCPO1! for September delivery on the Bursa Malaysia Derivatives Exchange gained 95 ringgit, or 2.39%, to 4,063 ringgit ($961.4) a metric ton at the close.

“Overall market sentiment has improved and demand has returned to normalcy. With our preliminary assessment on lower production in June and the soyoil rally, all helped palm prices to remain competitive,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

India’s palm oil imports soared to an 11-month high in June, driven by lower domestic inventories and a price discount to rivals soyoil and sunflower oil that encouraged refiners to ramp up purchases.

Dalian’s most-active soyoil contract (DBYcv1) rose 0.63%, while its palm oil contract CPO1! gained 1.52%. Soyoil prices on the Chicago Board of Trade ZL1! were 1.12% higher.

Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Exports of Malaysian palm oil products for June rose 4.3% month-on-month, according to independent inspection company AmSpec Agri Malaysia, while according to Intertek Testing Services, they grew 4.7%.

Indonesia’s crude and refined palm oil exports soared 53% in May from a year ago, data from the statistics bureau showed, as the tropical oil started trading at a discount to its rivals, boosting demand from key buyers.

The ringgit USDMYR, palm’s currency of trade, weakened 0.71% against the dollar, making the commodity cheaper for buyers holding foreign currencies.
Source: Reuters