Palm hits four-month high on hopes of better July 1-15 exports

KUALA LUMPUR: Malaysian palm oil futures surged 3% to touch a four-month high on Tuesday on expectations of improving exports ahead of cargo surveyor data due Wednesday.

Export pace from Malaysia during July 1-15 is expected to improve with the market pegging a 9-10% monthly fall, according to traders. This compares with a 17-18% monthly decline in July 1-10 exports.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange rose 71 ringgit, or 2.92%, to 2,500 ringgit ($585.48) a tonne, up for the third day.

The contract climbed to an intraday high of 3.09% and touched its highest level since March 5.

Disruptive weather in Indonesia with floods reported in West Kalimantan and Sumatra is also supporting prices, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.

"Supply-side worries are emerging, that should keep prices intact at least until the end of July," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.

An initial survey by the brokerage shows a 7%-13% drop in July production from the previous month, he said.

Production in June saw a higher-than-expected jump due to favourable weather conditions and delayed harvesting after coronavirus-fueled restrictions were eased, according to analysts and traders.

Ringgit, palm's currency of trade, weakened 0.19% against the dollar, making the vegetable oil cheaper for holders of foreign currency.

Dalian's most-active soyoil contract rose 1.38%, while its palm oil contract was up 3.96%. Soyoil prices on the Chicago Board of Trade also advanced 0.66%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.