KUALA LUMPUR: Malaysian palm oil futures rose for a fifth consecutive session on Wednesday, hitting a three-week high on concerns over tight supply and hopes of improving export demand.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange rose 90 ringgit, or 2.05%, to 4,480 ringgit ($1,078.74) a tonne, after declining to an intraday low of 0.8%.
The contract closed at its highest since August 17.
Import margins for crude and refined palm oil are seen as negative in India, Europe and China for September to December, which is why there was pressure on prices during the morning session, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
“There are also expectations for 15%-20% higher inventories for August with sustained production peaking in September and October.”
Despite stronger production in August, Refinitiv Commodities Research cut its estimate for Malaysia’s production in the 2020/21 marketing year by 2% from its previous estimate to 17.9 million tonnes, due to pandemic-led labour shortages, operational disruptions and the return of wet weather conditions.
Soyoil prices on the Chicago Board of Trade were up 1.4%. Dalian’s most-active soyoil contract rose 0.2%, while its palm oil contract gained 1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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