KUALA LUMPUR: Malaysian palm oil futures ended Wednesday at a nine-week high, underpinned by forecasts of a drop in December inventory levels and worries over floods disrupting output in the world's second-largest producer of the commodity.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed up 123 ringgit, or 2.5%, to 5,037 ringgit ($1,201.57) a tonne.
It rose for a fourth consecutive session to its highest closing since Nov. 3.
Malaysia's palm oil inventories at end-December likely shrunk 4.9% from the previous month to 1.73 million tonnes, their lowest in five months, a Reuters survey ahead of Malaysian Palm Oil Board data showed.
Palm oil logs third consecutive year of gains
Production is pegged to fall 8.6% to 1.49 million tonnes as floods hamper output, while exports are seen declining 4.9% to 1.4 million tonnes.
The disruption in arrivals of palm fruit bunches at flood-prone areas has resulted in millers delaying deliveries to refineries, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Refinitiv Commodities Research in a note lowered its 2021/22 output forecasts for top producers Indonesia and Malaysia by less than 1% from its last update due to flooding risks in the two countries.
"Looking ahead, the developments of labour shortages in Malaysia, Delta/Omicron variants of COVID-19, soybean developments in South America and, persistent weather concerns led by La Niña across Southeast Asia to South America are some of the key swing drivers," Refinitiv said.
Malaysia plans to implement its nationwide adoption of the B20 palm oil biofuel programme by the end of 2022, the country's palm oil board said.
Dalian's most-active soyoil contract rose 1.2%, while its palm oil contract gained 1.8%. Soyoil prices on the Chicago Board of Trade were up 1.3%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Comments
Comments are closed.