25.12.2019 (DAWN.com) - KUALA LUMPUR: Malaysian palm oil futures closed higher on Tuesday, as supply concerns due to lower output expectations boosted prices, while higher biofuel mandates in 2020 aided sentiment.

The benchmark palm oil contract, for March delivery, on the Bursa Malaysia Derivatives Exchange closed 0.6 per cent higher at 2,923 ringgit ($706.89) per tonne. The contract had fallen as much as 0.3pc earlier in the session. Palm prices have jumped over 35pc so far this year, on track for their best annual performance in nearly a decade.

“Market is expecting December output to be lower by 12pc-15pc versus November,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd. Despite falling exports, lower output in December and in the first quarter of 2020 will provide support for palm prices, Supramaniam added.

Poor rainfall and lower fertiliser use in top producers Malaysian and Indonesia earlier this year are likely to curb yields of the tropical oil in the first half of 2020, according to traders and analysts.

Malaysia’s palm oil exports have slowed this year, with December 1-20 exports falling between 10.2pc and 13.5pc from a month ago, according to cargo surveyors.

Published in Dawn, December 25th, 2019