KUALA LUMPUR (March 22): Malaysian palm oil futures hit a near two-week high on Wednesday, marking a second straight day of gains amid an uncertain production outlook and forecasts for a soyoil rally.
Palm oil production typically rises in March from February. However, industry players are uncertain about how much production will pick up this month as palm oil trees still face the brunt of a crop-damaging El Nino, which reduces yields of fresh fruit bunches.
Benchmark palm oil futures for June delivery on the Bursa Malaysia Derivatives Exchange closed up 0.7% at RM2,829 (US$639) a tonne. Earlier in the session, they hit RM2,839 a tonne, their highest since March 9.
Traded volumes for the day totalled 40,762 lots of 25 tonnes each.
Also supporting palm oil were expectations for a rise in soyoil prices after 2017 US biofuel requirements came into effect.
"The market is most likely anticipating a soyoil rally later, and this stage of our production is still slow, providing some short-term support," said a futures trader from Kuala Lumpur. He expects the market to be range bound until the end of the month.
Malaysian palm oil exports fell between March 1 and March 20 compared with a month ago. Cargo surveyor Intertek Testing Services reported a 3% drop, while Societe Generale de Surveillance saw a decline of 7.9%.
Palm oil is expected to break resistance at RM2,810 per tonne and rise towards the next resistance at RM2,880, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
Palm oil prices are also affected by movements in related vegetable oils. Soybean oil on the Chicago Board of Trade was up 0.03%, while the September soybean oil contract on the Dalian Commodity Exchange fell 0.3%.
The September contract for palm olein on the Dalian Commodity Exchange gained 0.4%.
Palm, soy and crude oil prices at 1041 GMT
|MY PALM OIL||APR7||2975||+7.00||2964||2987||876|
|MY PALM OIL||MAY7||2892||+19.00||2866||2906||4410|
|MY PALM OIL||JUN7||2827||+20.00||2797||2839||21970|
|CHINA PALM OLEIN||SEP7||5646||+24.00||5622||5682||550390|
|CBOT SOY OIL||MAY7||33.17||+0.03||32.93||33.29||5403|
|INDIA PALM OIL||MAR7||536.40||+0.50||531.30||538.7||628|
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US 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 US dollars per barrel
(US$1 = RM4.4250)
(US$1 = 65.4550 Indian rupees)
(US$1 = 6.8865 Chinese yuan)