Palm gains; posts highest weekly jump in over 3 years on supply worries

KUALA LUMPUR: Malaysian palm oil futures ended higher on Friday and clocked their highest weekly rise in more than three-and-a-half years, on stronger rival soyoil prices and as heavy rains in Indonesia, Malaysia and China stoked supply concerns.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange settled 3.7% higher at 2,614 ringgit ($613.33) per tonne, its highest closing since Feb. 21.

Palm clocked a 8.4% weekly gain, its highest jump since Nov.11, 2016.

"Weather factors have been supporting the market since a few days ago," a Singapore-based trader said.

Reports of heavy rains in top global palm exporters Indonesia and Malaysia, as well as China, world's second largest buyer of the edible oil, experiencing its worst flood in 30 years pushed up the Dalian market and Bursa Malaysia, he said.

The Malaysian Meteorological Department forecast a wet spell in the country to last until the end of July as heavy rains caused flash floods, forcing evacuation of hundreds of villagers, state new agency Bernama reported.

Flash floods in Indonesia, the largest producer of the vegetable oil, have killed at least 30 people in the country.

In China, the central Chinese city of Wuhan and several provinces declared red alerts on Friday, as heavy rains threatened to swell rivers and lakes and bring more disruption across the countryside and to global commerce.

Dalian's most-active soyoil contract rose 2.8%, while its palm oil contract gained 2.4%. Soyoil prices on the Chicago Board of Trade were also up 1.4%.

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

The Council of Palm Oil Producing Countries (CPOPC), long at loggerheads with the European Union over curbs on imports of the edible oil, have offered to "work together" with the bloc in drafting rules for the EU's latest 'Farm to Fork' food supply policy.