Concerns About Falling Production Lift Palm Oil Futures

Vegetable oil markets rebounded on Thursday as the selling had become overdone, and rising concerns about flooding and its impact on palm oil production in Indonesia and Malaysia triggered buying. Nearby palm oil futures jumped about two percent (April contract +63 ringgit per tonne), but gains in deferred contracts were smaller. Stabilization in soybean futures also buoyed soybean oil prices, which rose about two percent (March contract +88 basis points).

The second day of substantial gains in soybean oil futures drove the spread between the March soybean oil and palm oil contracts above five cents per pound on Wednesday. However, the Malaysian ringgit’s strength narrowed the spread slightly on Thursday despite similar percentage gains in both markets. On Wednesday, the move drove the spread to its widest in a…