Malaysian palm oil price rises to 18-month high as weather may lower output

Banks and plantations were among the top losers.

KUALA LUMPUR: Malaysian palm oil futures rose for a second day on Wednesday, reaching their highest levelin 18 months, on concerns year-end monsoon rains and El Nino-related dryness may lower future output.
    The benchmark palm oil contract for March on the Bursa Malaysia Derivatives Exchange rose 0.4 percent to 2,495 ringgit ($581.86) a tonne at the end of the trading session. The contract hit an intra-day high of 2,504 ringgit, the most since June 25, 2014.
   "There's some year-end covering going on, and people are
expecting a decline in December production. People are expecting a decline by high single digit (percent)," said a trader at a brokerage based in Kuala Lumpur. 

    Traded volume stood at 32,042 lots of 25 tonnes each on Wednesday.

    The year-end monsoon season impacts palm oil production
across Southeast Asia annually, as seasonal rains and floods
hinder the gathering of fresh fruit bunches, affect road
networks and disrupt supply chains.
    El Nino's dry weather pattern effect should also lower palm
fruit yields and output next year, reducing stockpiles and
supporting prices. Top producers Indonesia and Malaysia in
October slashed their 2016 forecasts of palm output.
  
    Traders expect demand for the full month of December to
fall, pending export data that will be released on Thursday.
Cargo surveyors reported a 15-16 percent drop in shipments from
December 1-25 compared with the same period a month ago.
  
    Palm oil may rise into a range of 2,649-2,698 ringgit per
tonne over the next three months, as indicated by its wave
pattern and a Fibonacci ratio analysis, according to Reuters
market analyst for commodities and energy technicals Wang Tao.
 
    In other vegetable oil markets, the U.S. January soyoil
contract is up 0.4 percent while the May soybean oil
contract on the Dalian Commodity Exchange gained 1.8
percent.
    
  Palm, soy and crude oil prices at 1050 GMT
                                                                                
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JAN6    2295    +4.00    2275    2300     127
  MY PALM OIL      FEB6    2419    +6.00    2398    2430    2703
  MY PALM OIL      MAR6    2495   +11.00    2474    2504   19342
  CHINA PALM OLEIN MAY6    4864  +174.00    4792    4868 2192238
  CHINA SOYOIL     MAY6    5718  +132.00    5640    5730 1132472
  CBOT SOY OIL     MAR6   30.81    +0.50   30.79   31.00    4219
  INDIA PALM OIL   DEC5  401.60    +0.50  400.80  402.80     469
  INDIA SOYOIL     JAN6  619.50    -1.90  617.80  623.80   29550
  NYMEX CRUDE      FEB6   36.93    -0.94   36.85   37.40   38495
                                                                                
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  India soy oil in Indian rupee per 10 kg
  Crude in U.S. dollars per barrel
        
($1 = 4.2880 ringgit)
($1 = 66.3700 Indian rupees)
($1 = 6.4896 Chinese yuan)
- Reuters