Palm oil set to climb for fifth week on production concerns

KUALA LUMPUR: Malaysian palm oil futures rose on Friday and were set to gain for a fifth consecutive week, their longest weekly winning streak in more than a year, underpinned by concerns over declining production as a labour shortage hampers output.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange gained 42 ringgit, or 1.02%, to 4,163 ringgit ($985.56) a tonne during early trade.

Palm has risen 0.6% so far this week and is on course for its longest weekly rise since mid-June 2020.

FUNDAMENTALS

• A labour shortage and coronavirus restrictions are clouding outlook for palm oil production in Malaysia, dashing hopes of a large rise in output in the seasonal peak production months during the third quarter of the year.

  • Dalian's most-active soyoil contract fell 0.2%, while its palm oil contract gained 0.9%. Soyoil prices on the Chicago Board of Trade were down 0.5%.

Palm oil jumps over 3pc

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

• The ringgit, palm's currency of change fell 0.01% against the dollar, making the commodity cheaper for holders of foreign currency.

  • Palm oil may fall to 4,009 ringgit per tonne, as it failed a few times to break a resistance at 4,164 ringgit, Reuters technical analyst Wang Tao said.