VEGOILS-Palm rises on anticipation of lower output, improved exports

KUALA LUMPUR, Jan 20 (Reuters) - Malaysian palm oil futures climbed on Tuesday as traders expected a sharp decline in production and stronger export demand.

The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange gained 37 ringgit, or 0.91%, to 4,104 ringgit ($1,013.33) a metric ton by the midday break.

The market was supported as traders are now expecting an output plunge of approximately 15% to 17% for January and as exports have improved significantly, signaling strong demand said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

"Overall, if both these variables continue right up to March, there could be a significant drawdown on end stocks," he said.

Cargo surveyors will release their export estimates for January 1-20 later in the day.

Dalian's most-active soyoil contract DBYcv1 rose 0.4%, while its palm oil contract DCPcv1 added 1.18%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.29%.

Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices rose after better-than-expected economic growth data from China lifted demand optimism, with markets also watching President Donald Trump's threats of increased U.S. tariffs on European nations over his desire to buy Greenland. O/R

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The ringgit MYR=, palm's currency of trade, strengthened 0.05% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.

Malaysian crude palm oil futures are expected to average slightly lower in 2026 than last year, with stronger supply from major producers and subdued biofuel demand putting downward pressure on prices, a Reuters poll showed.

Palm oil may test resistance at 4,108 ringgit per metric ton, a break above which could lead to a gain into the 4,125 ringgit to 4,149 ringgit range, Reuters technical analyst Wang Tao said. TECH/C

($1 = 4.0500 ringgit)