JAKARTA: Malaysian palm oil futures jumped the most in 11 years on Wednesday after sharp losses in the previous session, helped by expectations of lower output, although fears over the fast-spreading coronavirus capped the gains.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose as much as 9.1% in early trade.
However, the contract pared some gains and closed 5.9% higher at 2,728 ringgit ($671.09) per tonne.
The market is correcting after the tumble on Tuesday, a Kuala Lumpur-based trader said.
“How far the recovery can go, though, we don’t know. We have to see when markets in China open,” he added.
Palm oil prices dropped 10% on Tuesday in their biggest drop in nearly 12 years, 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.
hina’s Dalian Commodity Exchange is closed for the Lunar New Year holidays and will open on Feb. 3.
Palm oil prices were also seeing some support from likely lower production in January, two traders said.
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. palm oil is generally affected by price movements in related oils as its competes for a share in the global vegetable oil market. ($1 = 4.0650 ringgit) – Reuters
Source : The Star