KUALA LUMPUR: Malaysian palm oil futures were set for a third straight annual gain on Friday, with tight production in the first half of 2022 expected to keep prices firm next year.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange gained 5 ringgit, or 0.11%, to 4,688 ringgit ($1,123.68) a tonne in early trade.
Palm has jumped 30% so far in 2021 as a pandemic-fuelled labour shortage hammered output in the world's second largest producer while demand picked up after countries eased lockdowns. Prices are set to average around 4,149.57 ringgit ($994.62) this year.
Fundamentals
Palm prices are expected to stay strong next year as production will remain constrained due to soaring fertiliser costs and long-standing labour shortages, the Council of Palm Oil Producing Countries said on Thursday.
Dalian's most-active soyoil contract rose 0.2%, while its palm oil contract gained 0.4%. Soyoil prices on the Chicago Board of Trade were up 0.07%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices fell 1% but were set to post their biggest annual gain in 12 years, spurred by the global economic recovery from the COVID-19 slump and producer restraint, even as infections surged to record highs around the world.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Palm oil looks neutral in a range of 4,676-4,751 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.
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