Mumbai, 13 March (Commoditiescontrol) Palm oil prices surged at Malaysian exchange on Wednesday, tracking strength in Dalian edible oils, although expectations of an uptick in output from the world's second-biggest producer capped gains.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives(BMD) Exchange edged up 10 ringgit, or 0.24%, to 4,139 ringgit ($884.02) by the midday break.
The contract logged a minor uptick, driven by the diminishing appeal of palm oil's relative value to other edible oils, a market analyst said.
"Considering the anticipated rise in production (of palm oil), it appears that we are approaching a short-term price cap at the current market levels," he added.
Dalian's most-active soyoil contract gained 0.24% higher, while its palm oil contract added 0.51%. Soyoil prices on the Chicago Board of Trade were down 0.38%.
Palm oil takes directions from the price movements in related oils as they compete for a share in the global vegetable oils market.
Crude oil prices rallied on expectations of strong global demand, including in the world's top consumer the United States, and as even somewhat sticky U.S. inflation did not significantly alter expectations the Fed might start cutting rates soon. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock
Malaysia's palm oil stocks at the end of February dwindled to their lowest levels in seven months as production hit a 10-month low, offsetting the slowdown in exports.
Inventories at the end of last month fell 5% to 1.92 million metric tons from levels seen in January, crude palm oil production declined 10.18% to 1.26 million tons, while exports plunged 24.75%, data from industry regulator the Malaysian Palm Oil Board showed on Monday.
The Malaysian ringgit depreciated 0.19% against the dollar, making the commodity less expensive for buyers holding the foreign currency.
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