JAKARTA: Malaysian palm oil futures closed higher for a third straight session on Wednesday, boosted by hot weather and a supply shortage ahead of the Eid holiday as production slumped during Ramadan.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 89 ringgit or 2.06% to 4,401 ringgit ($925.94) a metric ton.
The contract had risen 3.01% earlier in the session to its highest in 13 weeks.
“The futures is strong due to the coming Eid holiday. The Ramadan month provides a slowdown in production plus hot weather over the past weeks has resulted in lower yield, so there is a shortage of palm oils in the market at the moment,” a Kuala Lumpur-based trader told Reuters.
The soyoil contract on the Dalian Commodity Exchange gained 1.10%, while its palm oil contract was up 3.25%. Soyoil prices on the Chicago Board of Trade were up 0.57%.
Palm oil is affected by price movements in related oils as they compete for a share of the global vegetable oils market.
Palm oil extends rise on short coverings, Chicago soyoil strength
India’s rapeseed and mustard output is likely to rise 7% from last year to a record 12.09 million metric tons in 2024. This will help the world’s biggest vegetable oil importer cut back on edible oil imports.
India’s palm oil imports hit a ten-month low in March to 481,000 tons, as the top vegetable oil buyer increased sunflower oil imports amid lower prices, traders said.
Exports of Malaysian palm oil products for March were seen rising between 11.77% and 29.2%, cargo surveyors Intertek Testing Services, AmSpec Agri and Societe Generale de Surveillance said.
Oil prices extended gains on Wednesday as a larger-than-expected fall in U.S. crude inventories and escalating geopolitical tensions raised investor worries about tighter supplies.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
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