Palm set for biggest weekly gain in two decades on supply worries
- Dalian's most-active soyoil contract rose 1.8%, while its palm oil contract gained 2.4%. Soyoil prices on the Chicago Board of Trade were up 1%.
KUALA LUMPUR: Malaysian palm oil futures were set to post their sharpest weekly gain in nearly two decades, climbing more than 3% on Friday, as agricultural markets rally on global supply concerns.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 137 ringgit, or 3.25%, at 4,352 ringgit ($1,058.11)a tonne, by the end of the morning session. The third-month contract hit its highest since March 2008.
The futures contract was set for a 12.5% rise for the week, its biggest since 2001.
The contract for spot-month May delivery was trading at a record high of 4,860 ringgit a tonne.
Palm oil is being supported by a rally in the global agricultural market led by Chicago corn and soybean futures, which are trading at multi-year highs.
"CPO futures opened gap higher on second straight day following persistently bullish momentum in global soybean oil and rapeseed oil markets, renewed palm oil buying from China and a strong undercurrent in Chinse RBD palm olein, soyoil and rapeseed oil futures, creating more hedge opportunities which could attract fresh buying," edible oil brokerage Sunvin said in a note.
China's cabinet on Thursday said it will stabilise wheat and rice minimum purchase prices and improve subsidies for soybean and corn production, in a bid to promote grain output and boost grain security.
Argentine soy and corn harvesting is being driven by ideal weather conditions but the lack of rain that is helping farmers bring in crops is also contributing to the shallowness of the Parana River, which has begun to dent agricultural exports.
Dalian's most-active soyoil contract rose 1.8%, while its palm oil contract gained 2.4%. 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 may extend gains into a range of 4,331-4,393 ringgit per tonne, Reuters technical analyst Wang Tao wrote in a report.
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