VEGOILS-Palm oil rebounds on dip in output, stronger crude oil prices

Updates with closing prices

SINGAPORE, Jan 4 (Reuters)Malaysian palm oil futures rose on Thursday, snapping four consecutive sessions of losses, underpinned by a decline in production and firmer crude oil prices.

The benchmark palm oil contract FCPOc3 for March delivery on the Bursa Malaysia Derivatives Exchange rose 35 ringgit, or 1%, to 3,656 ringgit ($789.12) a metric ton.

Malaysia’s palm oil inventories at the end of December likely fell further despite shrinking exports, as production declined, a Reuters survey showed on Thursday.

India’s palm oil imports in December rose to their highest in four months as purchases of refined palmolein surged because of competitive prices, five dealers told Reuters on Wednesday.

Indonesia recorded domestic sales obligation realisation of 3.26 million metric tons in 2023, which translated into 25.2 million tons in export permits, Trade Ministry official Syailendra said.

Oil rose more than 1% on Thursday, adding to gains in the previous session on concerns over Middle Eastern supply following disruptions at an oilfield in Libya and heightened tensions regarding the Israel-Hamas war. O/R

Stronger crude oil prices make palm a more attractive option for biodiesel feedstock.

Dalian’s most-active soyoil contract DBYcv1 and its palm oil contract DCPcv1 edged down 0.1% and 0.2% respectively. Soyoil prices on the Chicago Board of Trade BOcv1 slipped 0.3%.

Palm oil is affected by price movements in related oils as they compete for a share of the global vegetable oils market.

Hot, dry weather prompted analysts to slash their production estimates for Northern Brazil, the largest soybean producer, but rains this week are likely to benefit crops and improve estimates.

The Malaysian ringgit MYR=, palm’s currency of trade, weakened 0.1% against the dollar, making palm oil more attractive for foreign currency holders.

($1 = 4.6330 ringgit)

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(Reporting by Ashley Fang; Editing by Subhranshu Sahu, Savio D’Souza and Varun H K)

((ashley.fang@thomsonreuters.com))

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