KUALA LUMPUR: Malaysian palm oil futures rose for a second consecutive session on Thursday, driven by expectations of a decline in production, though gains were capped by a lack of demand from key importing countries.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange gained 71 ringgit, or 1.64%, to close at 4,405 ringgit ($993.91) a metric ton.
Production concerns persist, with Malaysian output expected to decline by about 13%-15% in February due to rains and floods across the country, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
The lack of demand from key markets is also a concern, Paramalingam added.
“For prices to sustain at these levels, there needs to be stronger buying interest, which is currently not seen. There’s not much of a festive season left. I think prices will be rangebound until the next MPOB figures are out.”
The Malaysian Palm Oil Board (MPOB) is expected to release its monthly supply and demand data on February 10.
Palm climbs on stronger Dalian oils, India demand optimism
Dalian’s most-active soyoil contract rose 2.01% and its palm oil contract added 1.33%. Soyoil prices on the Chicago Board of Trade gained 0.53%.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Oil prices edged up in Asian trading after Saudi Arabia’s state oil company sharply raised March oil prices, but the increase was barely a blip on the biggest slide in benchmark Brent prices in nearly three months the previous day.
The ringgit, palm’s currency of trade, weakened 0.27% against the U.S. dollar, making the commodity cheaper for buyers holding foreign currencies.
Malaysia’s palm oil inventories likely dropped to their lowest in nearly two years in January, as adverse weather disrupted production, although lower exports offset some of the decline, a Reuters survey showed.
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