KUALA LUMPUR: Malaysian palm oil futures closed higher for a second straight session on Wednesday, supported by a surge in exports during the first half of August, production worries and a weakening ringgit.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange gained 44 ringgit, or 1.16%, to 3,849 ringgit ($831.86) per metric ton, the highest closing since August 4.
A weakening ringgit and slower production growth for the first half of August in Peninsular Malaysia was the catalyst behind the massive price rally lately, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
There are also preliminary reports indicating hot and dry weather forecast in many areas of Indonesia, he added.
“In a nutshell, the market is in a consolidating phase and unless we see good improvement in production, prices will continue to remain defensive,” Paramalingam said.
Top producer Indonesia has set its crude palm oil (CPO) reference price lower at $820.35 per metric ton for Aug. 16-31, effectively keeping its CPO tax and levy unchanged, according to a trade ministry regulation.
Exports from Malaysia during Aug. 1-15 rose 18.9% from the same period in July, cargo surveyor Intertek Testing Services said on Tuesday. Another cargo surveyor, Amspec Agri, said exports jumped 24.2%.
The ringgit, palm’s currency of trade, continued its downward trajectory against the dollar for the fifth consecutive day, making the commodity cheaper for buyers holding foreign currency.
Dalian’s most-active soyoil contract gained 0.6%, while its palm oil contract jumped 1.9%. Soyoil prices on the Chicago Board of Trade were up 1.3%.
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