Palm gains nearly 3% on improving April exports, tight supplies

KUALA LUMPUR: Malaysian palm oil futures rose almost 3% on Friday, lifted by tight supplies and stronger exports in April, but the contract is on course for its first weekly decline in three.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 104 ringgit, or 2.9%, to 3,694 ringgit ($895.52) a tonne by the midday break.

For the week so far, palm is down more than 2%.

"The new benchmark month July is catching up to price-in the supply tightness for nearby delivery months amid improving April exports," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

"Front-month May is still persistent at 450-500 ringgit premium over the benchmark month," he added.

Palm oil exports during April 1-15 rose between 6% and 15% from the same period in March, cargo surveyors said on Thursday.

Malaysia on Thursday kept its May export tax for crude palm oil at 8%, but raised its reference price to 4,533.40 ringgit ($1,098.74) per tonne.

Dalian's most-active soyoil contract gained 2%, while its palm oil contract rose 3%. Soyoil prices on the Chicago Board of Trade were up 1%.

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

Palm oil July contract may rise to 3,654 ringgit per tonne, as it has cleared a resistance at 3,585 ringgit, Reuters technical analyst Wang Tao said.