Palm oil rallies to one-month peak on tight production, higher soyoil

KUALA LUMPUR: Malaysian palm oil futures jumped more than 2% for a third consecutive session on Thursday, hitting a one-month high, on anticipation of tight production and as rival soyoil gained.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed up 99 ringgit, or 2.54%, at 3,993 ringgit ($971.41) a tonne, its highest since March 23.

"As announced by World Bank in its report, global edible oils are expected to keep a strong momentum in 2021 due to supply shortfalls and stronger-than-expected consumption patterns," a Singapore-based trader said.

Global commodity prices are expected to stay firm around current levels in 2021 after recovering in the first quarter buoyed by strong economic growth, the World Bank said on Tuesday.

The Southern Peninsula Palm Oil Millers' Association in Malaysia estimated production during April 1-20 will be unchanged from the previous month, according to traders, defeating hopes of a recovery in supply.

Dalian's most-active soyoil contract rose 1.7% and its palm oil contract gained 2.5%. Soyoil prices on the Chicago Board of Trade were up 2.4%.

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

"The spread between soybean oil and palm oil is getting wider, will encourage buyers to buy more palm oil for nearby shipment," the trader said.

Soybean oil was trading $311 above palm oil, making palm the more attractive edible oil option.