Malaysian palm oil price hits highest in more than a month

Lower production: Export of palm oil products declined by 8.2% in 2016 to 23.29 million tonnes from 25.37 million tonnes a year ago, mainly due to lower production.

KUALA LUMPUR: Malaysian palm oil futures surged to more than a one-month high late on Wednesday on the back of forecasts for lower production in June.

But trading volumes were thin as the soyoil market on the Chicago Board of Trade (CBOT) was still closed for the U.S. Independence Day holiday, traders said.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was up 1.2 percent at 2,538 ringgit ($590.92) a tonne at the close of trade.

It earlier climbed to an intraday high of 2,542 ringgit, its highest since May 29. Traded volumes stood at 28,366 lots of 25 tonnes each.

"Prices extended some gains in the absence of rival oilseed soyoil and on concerns of lower June production," a Kuala Lumpur-based futures trader said.

"The continuous gain in China palm olein may also lift market sentiment," he said, referring to refined, bleached and deodorized palm olein on China's Dalian Commodity Exchange.

Palm oil prices are impacted by movements in related edible oils, as they compete for a share in the global edible oils market.

September soybean oil on the Dalian Commodity Exchange fell 0.3 percent, while the September palm olein contract was up 0.8 percent.

Palm oil output in Muslim-majority Malaysia, the world's second largest producer, is expected to decline or stay flat in June, due to the Ramadan and the Eid-Al-Fitr holiday period.

Palm oil may advance into a range of 2,522-2,534 ringgit per tonne, as it has broken above a resistance at 2,503 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao. - Reuters