Malaysian palm oil price jumps to one-week top on weather outlook

The benchmark palm oil contract price for January delivery on the Bursa Malaysia Derivatives Exchange was up 0.2 percent at 2,762 ringgit ($655.20) a tonne at the close of trade. It earlier rose to a daily high of 2,766 ringgit, the best level since Sept. 27. Traded volumes stood at 44,760 lots of 25 tonnes each at the end of the trading day.

KUALA LUMPUR: Malaysian palm oil futures jumped to a one week top on Wednesday evening, charting a second straight day of gains, over concerns that rainy weather could lower production.

    The benchmark palm oil contract for January delivery  on the Bursa Malaysia Derivatives Exchange was up 1.3 percent at 2,820 ringgit ($666.98) a tonne at the close of trade, its strongest daily gain in over two weeks.

    It earlier rose to an intraday high of 2,825 ringgit, its highest level since Nov. 2.  

    Traded volumes stood at 47,451 lots of 25 tonnes each in the evening.

    "The market rose on a weather play," said a Kuala Lumpur based futures trader. The year-end monsoon rains could lower production as heavy rains may disrupt the harvesting process. 

    Production in Malaysia, the second largest palm producer after Indonesia, is forecast to rise in October by 9.4 percent to 1.95 million tonnes, a Reuters survey showed.

    Official data from industry regulator the Malaysian Palm Oil Board is scheduled for release on Friday. 

    Palm was supported by gains in soyoil earlier in the day, as its spread with rival soyoil on the Chicago Board of Trade widened, said a trader. 

    A widening spread between the two edible oils typically prompts buyers to switch to the cheaper palm oil. 

    The December soybean oil contract on the Chicago Board of Trade rose 0.8 percent on Tuesday, and was last up 0.4 percent on Wednesday. Its spread with palm oil was at $107 around 1100 GMT, up from $96 last Friday.

    Palm oil is affected by movements in related oils, as they compete for a share of the global vegetable oils market. 

    Palm oil may end its current drop above support at 2,756 ringgit per tonne, and then resume its uptrend, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.

    In other related edible oils, the January soybean oil contract on the Dalian Commodity Exchange was down 0.1 percent, while the January palm olein contract on Dalian fell 0.7 percent. - Reuters