Palm oil reaches five-month high on output concerns

Malaysian palm oil futures rose more than 1 percent on Friday evening, charting a third straight day of gains, supported by a weaker ringgit MYR= and rising related edible oils.

KUALA LUMPUR: Malaysian palm oil futures extended gains on Tuesday evening to five-month highs on concerns about production, and tracking advances in related edible oils.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was up 1 percent at 2,737 ringgit ($639.64) at the close of trade, its fourth straight session of increases.

It earlier climbed to an intraday high of 2,771 ringgit, its loftiest since March 23.

Traded volumes stood at 64,166 lots of 25 tonnes each.

"Demand (for palm oil) is still the same but local production is not coming up, which is the main reason why the market is holding up," said a trader from Kuala Lumpur, adding however that he did not expect the surge to continue for long.

"Market gains have been very volatile. When the fall comes, it will be equally drastic."

The market could be "drawing strength" from palm olein on China's Dalian Commodity Exchange, said another trader, adding that production remained bullish for palm oil as output was lower than expected in Sabah, the top producing state in Malaysia.

Malaysia's palm oil output is seen rising in the second half of the year, in line with seasonal trends and as the dry weather effects of a crop-damaging El Nino phenomenon wear off.

Production in 2017 is forecast to rise 15.5 percent from the previous year to reach 20 million tonnes, according to the Malaysian Palm Oil Board, an industry body.

However, a Reuters survey of traders, planters and analysts pegged production lower, between 18.7 million and 19.5 million tonnes.

Palm oil may rise further to 2,744 ringgit per tonne, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.

In related vegetable oils, the October soybean oil contract on the Chicago Board of Trade rose 0.6 percent, while January soybean oil on the Dalian Commodity Exchange was up 1.6 percent.

The January palm olein contract on Dalian surged 2.3 percent.

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

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

palm oil , cpo , markets , futures , derivatives , price , plantations ,


Next In Business News

Lucid to start deliveries of electric cars with range exceeding Tesla's in October
Saudi launches $13 bln plan to turn coastal region into tourism hub
Brent oil dips after topping US$80 a barrel, highest in nearly three years
BlackRock says it is dipping its toes back in to China after rout
GLOBAL MARKETS-Stocks fall, bond yields jump as rate hikes loom
Vote of confidence
Indonesia’s massive 2022 budget gets key approval
12MP: No short-term market excitement
PAAB may face cash flow deficit of up to RM235mil
Scomi Energy Q4 net loss narrows

Stories You'll Enjoy