The Star Online (09/1/2019) - KUALA LUMPUR: Malaysian palm oil futures rose over 1 percent in early trade on Tuesday, hitting their highest in nearly three weeks, amid slowing production gains.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange gained 1.2 percent to 2,186 ringgit ($532.00) a tonne by the midday break. It earlier rose as much as 1.4 percent to 2,190 ringgit, its highest since Dec. 20.

Trading volumes stood at 24,769 lots of 25 tonnes each at noon.

"Production is seeing a lesser increase than expected, some updates (from reports) also suggest a marginal decline," said a Kuala Lumpur-based futures trader, referring to output data from the Malaysian Palm Oil Association showing that December output rose 1 percent from the previous month.

A Reuters poll forecast Malaysian output to fall 3.6 percent to 1.78 million tonnes in December, while inventories are expected to rise to 3.14 million tonnes, the highest since January 2000.

Another physical trader said that exports are moving out of Malaysia following India's decision to reduce import taxes on Southeast Asian palm oil.

"Malaysia is also offering less supplies for January. People are waiting and hoping prices will further go up," he said. 

India is the world's largest edible oil importer, and had previously raised import duties on edible oils to support local prices. 

In other related oils, the Chicago March soybean oil contract rose 0.4 percent, while the March soybean oil contract on the Dalian Commodity Exchange gained 0.5 percent. 

Meanwhile, the Dalian January palm oil contract was up 1.6 percent.

Palm oil prices are impacted by changes in soyoil prices, as they compete for a share in the global vegetable oil market. - Reuters