Palm oil rebounds as flooding in Indonesia stoke supply fears

KUALA LUMPUR: Malaysian palm oil futures rose 1pc on Friday as severe flooding in top producer Indonesia raised supply concerns, but the contract was set for its steepest weekly fall in nearly seven months tracking weakness in Dalian exchange and rival edible oils.

Palm has plummeted 9.5pc this week, its sharpest decline since Feb. 28.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 29 ringgit, or 1.05pc, to 2,786 ringgit ($668.91) a tonne during the midday break, after falling for four sessions in a row.

Prices recovered after media reports of Indonesia's Central Kalimantan and West Kalimantan administration declaring a state of emergency after two weeks of massive flooding, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.

"We also witnessed some bargain hunting today, as prices are relatively cheaper before we enter the low production months of October to December," he added.

Exports from Malaysia during Sept. 1 to Sept. 25 jumped between 6.9pc and 8.1pc from the month before, cargo surveyors said.

Dalian's most-active soyoil contract fell 0.63pc, while its palm oil contract slipped 1.17pc. Soyoil prices on the Chicago Board of Trade were down 0.28pc.

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

Palm oil may test a support at 2,718 ringgit per tonne, a break below which could cause a fall to 2,673 ringgit, Reuters technical analyst Wang Tao said.