KUALA LUMPUR: Malaysian palm oil futures advanced for a third straight day on Friday, setting the contract on course for a weekly uptick on stronger rival oil prices and concerns over the impact of El Nino on production.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 25 ringgit, or 0.72%, to 3,518 ringgit ($793.24) a tonne by the midday break. For the week, the contract has risen 1.06% so far.
Prices are supported by concerns over adverse weather conditions and as top buyers India and China, where palm oil inventories are low, look toward purchases at the current prices levels, said Sandeep Singh, director of The Farm Trade, a Kuala Lumpur-based consulting and trading firm.
Palm oil neutral in 3,363-3,418 ringgit range
Crude palm oil production in Malaysia, the world’s second-largest producer, could drop between 1 and 3 million tonnes next year as a result of the El Nino weather pattern, the Malaysian Palm Oil Board (MPOB) said on Friday.
Malaysia’s exports during May 1-25 fell 0.7% from the same week in April, cargo surveyor Intertek Testing Services said on Friday.
Another cargo surveyor, AmSpec Agri Malaysia, said exports rose 0.7%.
The ringgit, palm’s currency of trade, fell 0.02% against the dollar to its lowest since November, making the commodity cheaper for buyers holding foreign currency. Dalian’s most-active soyoil contract rose 2.2%, while its palm oil contract gained 2.3%.
Soyoil prices on the Chicago Board of Trade were up 0.5%. 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 extend gains to 3,563 ringgit per tonne before reversing its rise and falling towards the May 25 low of 3,388 ringgit, Reuters technical analyst Wang Tao said.
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