KUALA LUMPUR: Malaysian palm oil futures firmed on Friday to log their biggest weekly gain in three months, lifted by concerns over adverse weather hurting output in the world’s second largest producer.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed up 11 ringgit, or 0.22%, to 4,996 ringgit ($1,187.54) a tonne.
The contract has gained 6.5% this week, rising for a third straight week and clocking its best week since the week ended Oct. 8.
The Malaysian Palm Oil Association (MPOA) estimated December production declined 11.38% from a month earlier to 1.45 million tonnes, traders and analysts said.
The estimated drop is bigger than an 8.6% fall pegged in a Reuters poll, which may lead to a larger decline in inventories.
Market participants are eyeing industry data to assess the impact on production from flooding in recent weeks disrupting harvesting activities in several states. The Malaysian Palm Oil Board is scheduled to release its December data on Monday.
January production is also expected to weaken, with the Southern Peninsula Palm Oil Millers’ Association on Thursday estimating a 45.8% month-on-month decline in Jan. 1-5 output, according to traders.
Meanwhile, Brazilian soybean prices climbed past last year’s highs, as hopes for another record harvest are dashed by hot and dry weather in southern states, agribusiness consultancy AgRural said.
Soyoil prices on the Chicago Board of Trade were up 0.5%. Dalian’s most-active soyoil contract rose 0.6%, while its palm oil contract gained 0.5%.
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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