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Malaysian palm oil futures inched higher on Tuesday, supported by expectations of weaker February production and firmer Chicago soyoil prices, though weakness in Dalian oils and subdued exports capped gains.
The benchmark palm oil contract for May delivery on Bursa Malaysia Derivatives rose 2 ringgit, or 0.04%, to 4,561 ringgit per tonne by midday.
A trader based in Kuala Lumpur said: "Lower production is providing support for prices."
The most-active soyoil contract on the Dalian exchange slipped 0.03%, while the palm oil contract there lost 0.97%. Meanwhile, soyoil prices on the Chicago Mercantile Exchange rose 0.8%.
Palm oil tracks the price movements of competing vegetable oils, as it competes with them for a share of the global vegetable oils market.
Malaysian palm oil stocks are expected to fall to 1.5 million tonnes by the end of February, as floods hit production and demand rose ahead of the Ramadan season, according to a senior regulatory official who spoke to Reuters.
Palm oil supplies are likely to remain tight over the next two to three months, as floods have affected output in the world's two largest palm oil-producing countries, Indonesia and Malaysia, a leading palm oil producer told Reuters on Tuesday.
According to cargo surveyor Intertek Testing Services, exports of Malaysian palm oil products fell 2.7% during 1-25 February, while independent inspection company AmSpec Agri Malaysia estimated that exports rose 1.2% compared with the previous month.
The benchmark palm oil contract could fall further towards its 17 February low of 4,457 ringgit per tonne, as a flat or double-top pattern may be forming.
Source: Reuters