By Mei Mei Chu
KUALA LUMPUR, Jan 12 (Reuters) – Malaysian palm oil futures rose for a fourth straight session on Wednesday, lifted by industry estimates showing a steep drop in production even as sluggish demand weighed on market sentiment.
The benchmark palm oil contract FCPOc3 for March delivery on the Bursa Malaysia Derivatives Exchange gained 8 ringgit, or 0.16%, to 5,077 ringgit ($1,214.59) a tonne by the midday break. It had gained 0.53% overnight.
The contract is catching up on its discount against February contract, and prices are holding due to low production, a Kuala Lumpur-based trader said.
However, demand is weak as palm oil is losing market share to soft oils in the physical market due to high prices, he said.
Exports during the first 10 days of January declined 41% from the month before, according to data from cargo surveyors.
The Southern Peninsula Palm Oil Millers’ Association (SPPOMA) estimated production during Jan. 1-10 declined 32% from the same period in December, traders said on Tuesday.
Dalian’s most-active soyoil contract DBYcv1 gained 0.4%, while its palm oil contract DCPcv1 rose 1.3%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.4%, after jumping 1.5% overnight.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may test a support at 5,002 ringgit per tonne, a break below which could open the way to 4,927 ringgit, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.1800 ringgit)
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(Reporting by Mei Mei Chu; editing by Uttaresh.V and Subhranshu Sahu)
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