Malaysian palm oil futures hit their highest in nearly five months on Thursday on expectations of falling production. The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange was up 0.6 percent at 2,297 ringgit ($554.94) a tonne at the close of trade, its fifth straight session of gains.
It earlier hit 2,298 ringgit, its highest level since Sept. 5, 2018. Trading volumes stood at 19,894 lots of 25 tonnes each at the close of trade. "Palm is up on lower production (expectations) and short-covering, and tracking overnight soyoil (on the Chicago Board of Trade)," a Kuala Lumpur-based futures trader said.
"The technical outlook is positive for palm." Palm oil production in January is expected to fall from the month before, in line with the seasonal trend. Production dropped 2 percent to 1.81 million tonnes in December. Meanwhile, the Chicago March soybean oil contract rose 1.1 percent on Wednesday, in line with gains in US soybean futures and on worries of poor crop weather reducing yield potential in South America.
Soybean oil prices were last trading flat at 1040 GMT. In other related oils, the May soybean oil contract on the Dalian Commodity Exchange rose 0.3 percent, and the Dalian January palm oil contract gained 0.6 percent. Palm oil prices are impacted by movements in soyoil rates, as they compete for a share in the global vegetable oil market.
Palm oil may rise more into a range of 2,304-2,322 ringgit, as it has cleared a resistance at 2,274 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
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