Malaysian palm oil futures remained largely unchanged on Tuesday, as profit-taking capped potential gains ahead of the Christmas holiday. The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange rose by 13 ringgit, or 0.29%, ending the session at 4,555 ringgit ($1,015.83) per metric ton. According to the Malaysian Palm Oil Council (MPOC), crude palm oil futures traded sideways to lower due to profit-taking activities, as traders adjusted their positions before the festive break. The market had experienced a 2.46% gain on Monday, snapping a six-day losing streak. This recovery was largely driven by stronger Dalian soyoil prices and traders capitalizing on cheaper contracts after the recent price declines.

Indonesia's plan to increase its biodiesel mandate starting January 1 had already been largely factored into the market, MPOC noted. However, the implementation of this policy now appears more likely to happen gradually, as industry participants seek a phase-in period to manage the transition. The Dalian Exchange’s most-active soyoil contract rose by 1.06%, and its palm oil contract gained 1.47%, reflecting broader positive sentiment in the edible oils market. Meanwhile, soyoil prices on the Chicago Board of Trade increased by 0.12%, further supporting palm oil's price movement.

Palm oil typically tracks the price movements of rival edible oils, such as soyoil and sunflower oil, as they all compete for market share in the global vegetable oils sector. On Tuesday, oil prices also saw a rebound, reversing the previous session's losses. This uptick in oil prices helped boost the attractiveness of palm oil as a feedstock for biodiesel production, especially in the context of a slightly more positive market outlook in the short term. Despite the thin trading volumes ahead of the Christmas holidays, the stronger crude oil futures provided additional support to palm oil prices.

Additionally, the Malaysian ringgit strengthened by 0.07% against the U.S. dollar, which made palm oil more expensive for foreign buyers. A stronger ringgit generally works as a negative factor for palm oil exports, as it increases the cost for purchasers using other currencies. The Bursa Malaysia Derivatives Exchange will remain closed on Wednesday in observance of the Christmas holiday, meaning there will be no trading activity until the market reopens later in the week.