The palm oil contract for April on the Bursa Malaysia Derivatives Exchange rose as much as 1.41 percent in afternoon trade to touch its highest level since June 25, 2014 at 2,510 ringgit ($590.17) per tonne, before settling up 1.1 percent at 2,502 ringgit.
Traded volume stood at 62,044 lots of 25 tonnes each.
"The market will hold... The reason is tight availability of
crude palm oil. Moving forward there will be a production
decline and stocks are manageable," said a trader with a Kuala
Lumpur-based brokerage that deals in palm oil.
Palm oil output growth may decline this year in Southeast
Asia as dry weather caused by the El Nino weather phenomenon
affects fresh fruit yields and lowers productivity.
Malaysian palm output will rise only 0.7 percent in 2016
from a year ago to 20.1 million tonnes, the Malaysian Palm Oil
Board is forecasting. Indonesia, the world's biggest palm-oil
producer, will see exports drop to about 23-24 million tonnes,
the Indonesian Palm Oil Association has predicted, the first
decline in five years as supply is directed to domestic uses.
Palm oil shipments from Malaysia have fallen about 8 percent
so far this month, according to data from cargo surveyors, on
slowing economic growth in top consumer China.
Stockpiles in Malaysia as of end-December were at 2.6
million tonnes, down from an all-time high of 2.9 million tonnes
a month ago.
In related markets, crude oil prices fell to
around $30 per barrel on a surprise rise in U.S. inventories,
which could take a drag on palm oil prices as the vegetable oil
is used for blending into fuel for biodiesel.
The U.S. March soyoil contract gained 0.2 percent,
while the May soybean oil contract on the Dalian
Commodity Exchange rose 0.6 percent.
Palm, soy and crude oil prices at 1017 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB6 2413 +26.00 2380 2414 533
MY PALM OIL MAR6 2476 +29.00 2439 2481 4538
MY PALM OIL APR6 2502 +27.00 2463 2510 27834
CHINA PALM OLEIN MAY6 4750 +76.00 4686 4750 1084532
CHINA SOYOIL MAY6 5642 +36.00 5586 5644 617330
CBOT SOY OIL MAR6 30.80 +4.10 30.57 30.93 5291
INDIA PALM OIL JAN6 433.00 +4.10 429.50 433.60 1178
INDIA SOYOIL FEB6 612.20 +2.85 610.00 613.60 23590
NYMEX CRUDE MAR6 30.24 -1.21 30.14 31.22 83043
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 = 4.2530 ringgit)
($1 = 68.0300 Indian rupees)
($1 = 6.5779 Chinese yuan) - Reuters