JAKARTA: Malaysian palm oil futures posted a weekly gain of more than 1.5% due to expectations of sluggish production and a slow resumption of exports in Indonesia, although the contract ended slightly lower on Friday.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 0.36% to 6,445 ringgit ($1,469.11) per tonne by closing. It posted a 1.45% gain for the week.
Palm oil has gained 3.64% in the past three sessions, hitting a one-week high earlier on Friday before retreating.
The benchmark is down on profit-taking, a Kuala Lumpur-based trader said, adding that, “the underlining strength is still there”.
Bursa Malaysia will be closed on Monday for a public holiday.
Malaysia’s palm oil inventories at the end of May are set to fall for a sixth month out of seven, squeezed by declining production and as exports surged to the highest since December, a Reuters survey showed on Friday.
Concerns on Malaysia’s output rose as Indonesia barred a group of its plantation workers from travelling to Malaysia amid labour shortage in Malaysia’s palm plantations.
Rival Indonesia by Friday has issued export permits for a total of 275,454 tonnes of palm oil products since allowing exports to resume, a senior Trade Ministry official said.
While the market was relieved Indonesia has reopened exports, traders said the amount the government has allowed to be exported has been low so far.
Soyoil prices on the Chicago Board of Trade were down 0.25%. Dalian Commodity Exchange was closed on Friday for Dragon Boat Festival holidays.
Palm oil may break a resistance at 6,577 ringgit per tonne, and rise into a range of 6,682-6,731 ringgit, Reuters technical analyst Wang Tao said.
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