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VEGOILS Palm oil rises as floods likely to disrupt harvest process

VEGOILS Palm oil rises as floods likely to disrupt harvest process
December 21, 2021 Reuters

JAKARTA (Reuters) – Palm oil futures climbed on Tuesday as floods in states of Peninsular Malaysia stoked the prospect of some supply slowdown while the edible oil also tracked the rebound in rival vegetable and crude oils.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange gained 2.07% to 4,384 ringgit ($1,041.58) by midday trade. It rebounded from Monday's loss of 2.56%.

"The export drop is lower then expected and production is disrupted in Peninsular, so it's slightly supportive," a palm trader in Kuala Lumpur said referring to floods that could hamper the harvesting process.

Floods affected seven states in Peninsular Malaysia over the weekend, killed at least eight people and displaced more than 32,000.

Exports of Malaysian palm oil products for Dec. 1-20 fell 5.1% from the same period in November, cargo surveyor Intertek Testing Services said on Monday, while independent inspection firm AmSpec Agri Malaysia said exports fell 6.6%.

Palm also tracked the rebound in other vegetable oils, the trader added.

Dalian's soyoil contract for May delivery gained 0.34%, while its palm oil contract gained 0.92%. Soyoil prices on the Chicago Board of Trade rose by 1.13%.

Crude oil prices also rose on Tuesday, though investors remained worried about the rapid spread of the Omicron coronavirus variant, which may dent fuel demand.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market, while stronger crude oil futures typically make palm a more attractive option for biodiesel feedstock.

Meanwhile, the world's biggest vegetable oil importer India on Monday slashed the basic import tax on refined palm oil to 12.5% from 17.5%, as it tries to cool near-record prices.