KUALA LUMPUR: Malaysian palm oil futures reversed early losses on Monday, as crude strengthened and analysts estimated tightening December production and stockpile, although weaker rival oils weighed on prices.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange gained 28 ringgit, or 0.58%, to 4,828 ringgit ($1,147.07) a tonne by the midday break, after declining as much as 1.7%.

Malaysia’s palm oil end-stocks for November beat market surveys with a smaller-than-expected monthly decline of 0.96% as the rise in exports came in lower than estimates, Malaysian Palm Oil Board data showed on Friday.

In December, stocks is likely to fall 7.1% month-on-month to 1.69 million tonnes, with output falling 5% and exports rising 2%, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.

Tight near term global edible oil and palm oil inventories will keep prices firm at 4,000-5,000 ringgit per tonne this month and could remain elevated until first quarter of 2022 when supply is expected to improve, Ng said.

“The strong crude palm oil price and expectations of a gradual return of foreign workers are positives. However, these are offset by concerns over rising fertiliser costs in 2022,” she added.

Dalian’s most-active soyoil contract slipped 0.9%, while its palm oil contract lost 1.2%. Soyoil prices on the Chicago Board of Trade were up 0.6%, after a 2.1% slump 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.

Oil prices rose on optimism that the Omicron coronavirus variant’s impact will be limited on global economic growth and fuel demand, making palm a more attractive option for biodiesel feedstock.