Malaysian palm oil futures hit a fresh 10-week high on Wednesday during the second half of trade, boosted by lingering concerns that dry weather in Indonesia could impact output. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange earlier rose as high as 2,109 ringgit ($503.82) per tonne, their highest since May 29, but pared some gains and ended the day flat at 2,102 ringgit.
"Market sentiment is supported by concerns of Indonesia's hot and dry weather," said a Kuala Lumpur-based trader, explaining that this could lower output. Indonesia said last week it is deploying thousands of military and police to douse forest fires after declaring an emergency in six provinces on the island of Sumatra and in the province of Kalimantan on Borneo. Indonesia, the world's largest palm oil producer, has faced global pressure to put an end to slash-and-burn clearance of land, often to plant palm and pulp plantations, particularly after devastating fires in 2015.
Meanwhile, Oil World's Thomas Mielke said in an industry conference on Wednesday that palm oil prices are forecast to average $570 a tonne, Free on Board (FoB) Indonesia between January and June next year, from $468 a tonne in July, as rapidly increasing consumption and slowing growth in production reduce global stockpiles.
In related edible oils, US soyaoil futures on the Chicago Board of Trade rose 0.6%, while the September soyaoil contract on the Dalian exchange rose 0.8%.
The Dalian September palm oil contract gained 0.1%. Palm oil prices are affected by movements in related oils that compete in the global vegetable oils market.
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