January 20, 2020 / 5:56 AM / a month ago

VEGOILS-Palm oil climbs on firmer soyoil, weaker ringgit

* Worries over demand from top buyer India weigh on market

* Palm up 1.2% at midday break after last week’s 9% drop (Adds midday prices, trader’s comment)

By Mei Mei Chu

KUALA LUMPUR, Jan 20 (Reuters) - Malaysian palm oil futures climbed more than 1% on Monday, rebounding from last week’s sharp fall on firmer rival soybean oil prices and a weaker ringgit, though worries about demand from top edible oil buyer India capped gains.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange gained 33 ringgit, or 1.2%, to 2,870 ringgit by the midday break.

It fell 9.5% last week, its biggest weekly decline since November 2008, dragged by down by India’s import restrictions on the refined product, and an export tax hike.

The market opened higher on Monday but sentiments were not bullish due to the “absence of Indian buying, indications of more than anticipated recovery in production, and reduction in export pace”, said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.

He said a sudden change in the production and export scenario raised concerns whether palm oil stocks would fall below 2 million tonnes at the end of January.

Malaysia’s Jan. 1-15 palm oil exports rose between 2.2% and 5.8% from the month before, cargo surveyors said, which were lower than expectation.

India, the world’s largest edible oil buyer, has restricted imports of refined palm oil and informally instructed traders to avoid purchases from Malaysia following a diplomatic spat.

Malaysia raised its export tax for crude palm oil to 6% from 5% for February.

However, higher biodiesel demand in top suppliers Malaysia and Indonesia and expectation of supply tightness in the first half of 2020 have kept prices supported.

“In the absence of any fresh bullish news, the ongoing India-Malaysia dispute and the Lunar New Year holiday in China next week is likely to put some pressure on Malaysian palm oil,” Anilkumar said.

Dalian’s most-active soyoil contract inched up 0.3%, while its palm oil contract slid 0.4%. Soyoil prices on the Chicago Board of Trade were flat after climbing 1% in the previous session.

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

The ringgit, palm’s currency of trade, fell 0.15% against the dollar, making the edible oil cheaper for holders of foreign currency.

Palm oil may stabilise around a support at 2,818 ringgit per tonne, and bounce towards a resistance at 2,911 ringgit, Reuters technical analyst Wang Tao said.

Reporting by Mei Mei Chu; Editing by Shailesh Kuber and Subhranshu Sahu

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