04.10.2018 (DAWN) - KUALA LUMPUR: Malaysian palm oil futures gained 1.8 per cent on Wednesday, its largest intraday climb since Sept 4, supported by rising crude oil prices. Strength in soybean oil provided additional support to the tropical oil but gains were capped by higher palm oil reserves in Malaysia, the world’s second largest producer.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was up 39 ringgit, or 1.8pc at 2,199 ringgit ($531.54) a tonne, after rising to its highest since Sept 18 at 2,209 ringgit a tonne earlier in the session. Trading volumes stood at 44,514 lots of 25 tonnes each.

“Gains in crude oil prices are supporting palm oil because the higher crude oil goes there will be more use of palm oil in making biodiesel,” said a Kuala Lumpur-based trader. “Had it not been for the strength in crude oil, palm oil would have dropped below 2,000 ringgit a tonne because the stocks are high.” Oil prices were firm on expectations of a tighter market once US sanctions targeting Iran’s petroleum industry kick in next month, although a strong dollar and rising US crude supply curbed gains.

Soybean oil climbed 0.6pc to its highest since late June as unseasonal rains slowed the soybean harvest in parts of the US Midwest. Another trader said the market was also expecting sustained export momentum. Exports of Malaysian palm oil products for September rose 51.6pc versus August, cargo surveyor Intertek Testing Services said last Friday.