Malaysian palm oil price soars to over two-year high

Malaysian palm oil futures extended gains, touching a two-week high on Wednesday on improving demand amid expectations of further weakness in the ringgit.

KUALA LUMPUR: Malaysian palm oil futures climbed to their strongest levels in two and a half years on Monday evening on declining output data, and tracking gains in rival oils on China's Dalian Commodity Exchange and the Chicago Board of Trade (CBOT). 

    Benchmark palm oil futures for January on the Bursa Malaysia Derivatives Exchange surged 3.6 percent to 2,822 ringgit ($676) a tonne at the end of the trading day. Earlier in the session, the contract hit 2,828 ringgit, its highest since March 13, 2014 and also posted the strongest gains in a week.

    Traded volumes stood at 59,626 lots of 25 tonnes each at the close of trade, higher than the 2015 daily average of 44,600 lots.

    "The market's second session was firm on Dalian and the CBOT, and flew on data from the Malaysian Palm Oil Association," said a futures trader from Kuala Lumpur, saying the production data recorded a near 18 percent drop in Peninsular Malaysia and a 11 percent decline in Malaysia overall.     

    Palm oil prices respond to the movements of related vegetable oils as they compete for a share in the global edible oils market.

    The contract hit a more than two-year high of 2,800 ringgit on Oct. 18 tracking the surge in Chinese vegetable oils, which also rose to their highest levels in about two years. 

    Output in Malaysia, the world's second largest palm producer after Indonesia, is affected by the lagging effects of last year's crop-damaging El Nino. 

    September production in Malaysia rose 0.8 percent from the previous month, its smallest monthly gain since June 2011. This was the lowest output figure for September since 2010. 

    In related vegetable oils, the December soybean oil contract  on the Chicago Board of Trade rose as much as 2.6 percent, while the January soybean oil contract on China's Dalian Commodity Exchange climbed as much as 2 percent.

    The January contract for palm olein on China's Dalian Commodity Exchange surged 3.5 percent.

- Reuters
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