NEW DELHI: Malaysian palm oil futures opened higher on Wednesday, extending gains from the previous session as a bigger-than-expected fall in January inventories supported the market.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange gained RM40, or 1.03 per cent, to RM3,941(US$824.30) in early trade.
FUNDAMENTALS
* Malaysia's palm oil stocks fell more than expected to their lowest in six months at the end of January as production plunged to the lowest level in nine months amid steady exports.
* Palm oil imports by India, the world's biggest importer of vegetable oils, in January dropped more than 12 per cent from a month ago to a three-month low as negative refining margins for crude palm oil prompted refiners to switch to rival soyoil.
* The rebound in palm oil prices is likely to be capped by abundant supplies of rival soyoil and sunflower oil, which are "soft" oils available at discounts to tropical palm oil for the first time in more than a year.
* Soyoil prices on the Chicago Board of Trade fell 0.33 per cent.
* Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
* Oil prices fell in early Asian trade after a U.S. industry group reported crude stocks rose more than expected last week and as investors reined in expectations for interest rate cuts by the U.S. Federal Reserve.
* Stronger crude oil futures typically make palm a more attractive option for biodiesel feedstock.
* Palm oil may revisit its Feb. 9 high of RM3,945 per metric ton, as it has quickly recovered from the Tuesday low of RM3,840.
MARKET NEWS
* Asian shares tracked a negative lead from Wall Street on Wednesday, while the dollar and Treasury yields jumped as traders pared back expectations for the pace and scale of rate cuts by the Federal Reserve this year.