January 29, 2020 / 10:26 AM / 21 days ago

VEGOILS-Palm oil recovers from Tuesday's sharp drop on lower output expectations

 (Adds closing prices)
    JAKARTA, Jan 29 (Reuters) - Malaysian palm oil futures
jumped the most in 11 years on Wednesday after sharp losses in
the previous session, helped by expectations of lower output,
although fears over the fast-spreading coronavirus capped the
gains.  
    The benchmark palm oil contract          for April delivery
on the Bursa Malaysia Derivatives Exchange rose as much as 9.1%
in early trade.  
    However, the contract pared some gains and closed 5.9%
higher at 2,728 ringgit ($671.09) per tonne.
    The market is correcting after the tumble on Tuesday, a
Kuala Lumpur-based trader said. 
    "How far the recovery can go, though, we don't know. We have
to see when markets in China open," he added.  
    Palm oil prices dropped 10% on Tuesday in their biggest drop
in over a decade, as the death toll from the virus rose sharply
in China and some health experts questioned whether Beijing can
contain the virus which has spread to more than 10 countries,
including France and the United States.   
    China's Dalian Commodity Exchange is closed for the Lunar
New Year holidays and will open on Feb. 3. 
    Palm oil prices were also seeing some support from likely
lower production in January, two traders said. 
    Dry weather and lower fertiliser use, a move adopted by some
growers to cut costs, reduced output last year are likely to
lead to lower production this year.             
    A 1.7% jump in soyoil prices on the Chicago Board of Trade
also lent some support to palm oil. 
    Palm oil is generally affected by price movements in related
oils as its competes for a share in the global vegetable oil
market.

($1 = 4.0650 ringgit)
    

 (Reporting by Fransiska Nangoy and Fathin Ungku; Editing by
Aditya Soni and Amy Caren Daniel)
 
 
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