Malaysian palm oil futures surged to a two-year high on Monday, rising for a sixth session out of eight, on persistent worries that a crop-damaging El Nino weather event would curb yields. Palm oil experts had forecast at a Kuala Lumpur industry conference earlier in March that benchmark prices could soar to as much as 3,000 ringgit a tonne by mid-year, up around 10 percent from current levels, due to El Nino.
"The market is technically still speculative. It's still reacting to bullish news, as was spoken at the conference," said a trader from a brokerage firm in Kuala Lumpur. "Price levels of 3,000 ringgit is coming, but you also have to look at the overall scenario of the market, including demand." The palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 1.3 percent to reach 2,758 ringgit ($688) per tonne at the close of trade. It earlier hit 2,764 ringgit in the afternoon, the strongest since March 21, 2014.
Traded volumes were 39,600 lots of 25 tonnes each, versus a 2015 daily average of 44,600 lots. Leading vegetable oils analyst Dorab Mistry estimated on Monday that annual palm output from Malaysia, the world's second largest grower after Indonesia, will fall by 2 million tonnes in the oil year ending September 2016.
Mistry maintained his estimate for Indonesian palm production to fall by 1.2 million tonnes. Technical charts show palm oil could rise to 2,776 ringgit over the next 24 hours as it has cleared a resistance at 2,729 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals. In competing vegetable oil markets, the September soybean oil contract on the Dalian Commodity Exchange gained 0.5 percent, and the May Chicago Board of Trade soyoil contract rose 1.4 percent. Crude palm kernel oil's offer price rose to a five year high of 5,423.35 ringgit per tonne on Monday evening on supply concerns, according to price assessments by Thomson Reuters, as traders anticipate tighter supplies of the oil moving forward.
Comments
Comments are closed for this article.