Palm oil extends gains as output concerns fade, better export outlook

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KUALA LUMPUR (March 21): Malaysian palm oil futures hit a more than two week high on Thursday, as easing concerns about high output and expectations of better export demand buoyed investor sentiment.

The benchmark third-month palm oil contract on the Bursa Malaysia Derivatives Exchange was up 0.4% at 2,172 ringgit (US$534.98) a tonne, locking in a fifth straight session of gains, after earlier hitting its highest level since March 4.

"Earlier expectations of a production increase is changing and exports are picking up," said a Kuala Lumpur-based trader, adding that hot weather could also lead to slowing output.

Top producers Indonesia and Malaysia had a bumper harvest last year, flushing the market with palm oil and dampening prices. And European Union plans to phase out palm oil in renewable transport fuel by 2030 have added to concerns.

Cargo surveyor Societe Generale de Surveillance reported on Wednesday a rise of 0.8% in exports of Malaysian palm oil products for the March 1-20 period, compared with the same period a month ago.

Meanwhile, a stronger ringgit made the vegetable oil less attractive to buyers holding foreign currencies, limiting the gains in palm oil prices. 
 
The ringgit rose as much as 0.3% against the dollar to its strongest level since last July. 

"The ringgit has continued to appreciate after the U.S. Federal Reserve signalled no rate hike," said another trader.  

Palm oil is expected to test resistance at 2,190 ringgit per tonne, a break above which could lead to a gain to 2,227 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

The Chicago soybean oil contract was last up 0.4%. The Dalian Commodity Exchange soyoil contract was 0.3% higher, and the palm olein contract was
up 0.6%.    

 Palm, soy and crude oil prices at 1046 GMT

 Contract        Month   Last  Change     Low    High  Volume
 MY PALM OIL     APR9    2090   -5.00    2082    2098    1357
 MY PALM OIL     MAY9    2137   +7.00    2120    2148    5257
 MY PALM OIL     JUN9    2172   +8.00    2154    2184   18458
 CHINA PALM      MAY9    4492  +26.00    4470    4502  294702
 OLEIN                                                 
 CHINA SOYOIL    MAY9    5550  +18.00    5530    5572  158422
 CBOT SOY OIL    MAY9   29.39   +0.12   29.28   29.45    4257
 INDIA PALM OIL  MAR9    0.00   +0.00    0.00       0       0
 INDIA SOYOIL    APR9   740.7   +2.25   738.2  742.35    8520
 NYMEX CRUDE     MAY9   59.93   -0.30   59.81   60.33  123235
 
(US$1 = 4.0600 ringgit)
(US$1 = 6.6824 Chinese yuan)
(US$1 = 68.5100 Indian rupees)