Malaysian palm oil rises to close year with strongest annual gain since 2010

Malaysian palm oil futures rose in late trade on Friday to close the year up 25.1 percent for the strongest annual gain since 2010. Other related palm oil products also recorded their biggest annual gains in six years. Refined, bleached and deodorised (RBD) palm stearin prices surged 47 percent this year, while RBD palm olein rose 33 percent, according to assessment prices by Thomson Reuters. Palm kernel oil topped the rest by soaring 85 percent in 2016.
Prices of palm oil products have been steadily rising this year, as supply was tight on weaker production due to the dry weather effects of last year's El Nino. Benchmark palm oil futures for March delivery on the Bursa Malaysia Derivatives Exchange rose 0.1 percent to 3,109 ringgit ($693.28) a tonne by the end of the trading day, and are up 1.2 percent for the month of December.
The day's traded volumes stood at 42,869 lots of 25 tonnes each. "The market is short-covering towards the New Year long holidays," said a trader from East Malaysia, adding that the tight supply situation could further boost prices. "We foresee that prices will bounce back again as we go into the seasonal low (output) period. Stocks will be even lower than where we are now."
Malaysian production in November fell 6.1 percent to 1.57 million tonnes as output saw a seasonal decline, according to government data. End-stocks rose 5.2 percent to 1.66 million tonnes. The year-end rains from the monsoon season also disrupt fruit harvesting, causing tight supplies, traders say. In related edible oils, the March soyabean oil contract on the CBOT rose 0.3 percent, while the May soyabean oil contract on the Dalian Commodity Exchange was down 0.2 percent. The May contract for Dalian palm olein dropped 0.6 percent.