KUALA LUMPUR: Malaysian palm oil futures climbed to their highest in three weeks on Friday, on course for a weekly gain, on improving demand while exports from top producer Indonesia remain stuck.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 37 ringgit, or 0.57%, to 6,570 ringgit a tonne by the midday break.
Palm is set to snap a third weekly loss and has gained 7.5% so far this week.
“Palm prices are reacting to the tightness on the nearby availability of olein, due to the better than expected recovery in demand,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Malaysia’s production for the month of May might dip between 7% to 5%, and which could lead to a further cut in inventories, he said.
Exports of Malaysian palm oil products for May 1-25 rose 23.9% to 1,112,175 tonnes from 897,683 tonnes shipped during April 1-25, cargo surveyor Societe Generale de Surveillance said on Thursday.
Leading edible oil analyst Dorab Ministry on Thursday urged Indonesia to immediately resume exports of palm oil, warning that an extended halt in shipments pending details of a domestic sales rule could spell economic “doom” for farmers.
Palm hits three-week closing high on bargain buying
Uncertainties about the exports rule in Indonesia and the move by the Indian government to waive import taxes for competing soy and sunflower oil kept prices of competing edible oils elevated, Paramalingam said.
Dalian’s most-active soyoil contract rose 2.27%, while its palm oil contract jumped 4.3%. Soyoil prices on the Chicago Board of Trade were up 0.02%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may rise into a range of 6,713-6,731 ringgit per tonne, driven by a wave (c), Reuters technical analyst Wang Tao said.
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