KUALA LUMPUR: Malaysian palm oil futures climbed for a third straight session on Thursday, tracking higher crude and soybean oil prices, as traders awaited data on April exports due later in the day.
The contract, however, was on course for a monthly drop of 13% after a historic rout in oil prices and as coronavirus-driven lockdowns around the globe slammed demand.
On Thursday, the benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 53 ringgit, or 2.6%, to 2,084 ringgit ($483.30) per tonne by the midday break. It was up 0.4% for the week.
However, the recovery in prices is likely to be short-lived unless Malaysian palm oil production is lower than market expectations, said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.
Palm oil exports from Malaysia, the world's second-largest palm producer, during its first month of a partial lockdown to contain the coronavirus tumbled 41.7% from a year earlier to 890,331 tonnes, its plantation industries and commodities minister said on Thursday.
FGV Holdings, the world's largest crude palm oil producer, forecast a significant drop in 2020 output as coronavirus-driven restrictions disrupted work at its plantations and mills.
"The demand for palm oil is yet to improve on the whole but destinations are now buying a bit due to lucrative prices and a widened palm oil discount over soybean oil," Bagani said.
Palm futures were supported on Thursday by a more than 10% jump in oil prices. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Meanwhile, Dalian's most-active soyoil contract gained 0.37%, while its palm oil contract jumped 1.65%. Soyoil prices on the Chicago Board of Trade were up 0.76%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The Malaysian bourse will be closed for Labour Day on Friday and will resume operations on Monday.
Palm oil still targets a zone of 2,072-2,107 ringgit, as suggested by its wave pattern and a projection analysis, Reuters technical analyst Wang Tao said. - Reuters
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