04.02.2020 (todayonline.com) - JAKARTA, Feb 4 - Malaysian palm oil futures rose more than 2% on Tuesday as lower production and gains in its main oilseed rivals buoyed prices, although concerns about China's coronavirus outbreak and its impact on demand capped gains.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose a second straight day, touching 2,687 ringgit a tonne - highest since Thursday - before pulling back on the worries about demand.
The contract was last trading about 0.8% higher at 2,635 ringgit ($640.34) per tonne.
Prices remained firm as palm oil production is expected to have declined in January, a Kuala Lumpur-based said.
"Production is expected to fall within the range of 4% to 17%, and even up to 22%," the trader told Reuters.
Dry weather and lower fertiliser use reduced output last year and are likely to lead to lower production this year. Growers have been using less fertiliser to help cut costs.
Also supporting prices were gains in rival oils.
Palm oil and soyoil on the Dalian Commodity Exchange rebounded after declining 7% in the previous session.
Dalian palm oil rose 2%, and soyoil traded 1.3% higher.
Chicago Board of Trade soybean oil rose 0.8%.
Still weighing on the market is the coronavirus that has sickened thousands in China and killed more than 420. The epidemic is expected to disrupt supply chains across many commodities and energy sectors.
The benchmark palm oil contract fell nearly 9% last week on fears the virus epidemic would lower demand from China, the world's second-biggest buyer of the vegetable oil.
Palm oil is biased to break a support at 2,592 ringgit per tonne and fall into a range of 2,435-2,513 ringgit, Reuters analyst, Wang Tao said.
* U.S. soybean futures edged higher on Tuesday, underpinned by signs of strong demand for North American supplies, although concerns about China's coronavirus limited gains.
* Oil prices rose around 0.5% on Tuesday, matching moves in other financial markets as investors regained some calm after Monday's sharp sell-off on virus worries.
* A fragile calm gripped Asian shares on Tuesday as investors waited anxiously to see if Beijing could stem the rout in Chinese assets, while oil held near 13-month lows as the coronavirus throttled demand in the world's biggest importer of fuel.
* U.S. stocks rallied on Monday, boosted by technology shares and surprising strength in U.S. manufacturing activity, following last week's selloff on concerns about the economic impact from the fast-spreading coronavirus out of China.
($1 = 4.1150 ringgit) REUTERS
Read more at https://www.todayonline.com/world/vegoils-palm-oil-rises-more-2-supply-worries-gains-rivals