KUALA LUMPUR: Malaysian palm oil futures closed higher on Friday for a second straight session, as stronger rival oils and concerns about the impact of El Nino stoked buying interest after heavy losses earlier in the week.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 111 ringgit, or 3.39%, to 3,390 ringgit ($764.37) a tonne, its highest daily gain in nearly a month.
For the week, the contract has declined 5%.
The recent strong reversal in prices widened arbitrage trading in destination markets, especially in the forward month contracts, said Marcello Cultrera, director at Singapore-based commodities consultancy Apricus 8 Pte Ltd.
Palm oil demand is likely to improve in June and through the second half of the year, he said.
Early signs of hot, dry weather caused by El Nino are threatening food producers across Asia, while American growers are counting on heavier summer rains from the weather phenomenon to alleviate the impact of severe drought.
Dalian’s most-active soyoil contract rose 2.2%, while its palm oil contract gained 2%. Soyoil prices on the Chicago Board of Trade rose 1.2%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Malaysia’s financial markets will be closed on Monday, June 5, for a public holiday. Trading will resume on Tuesday.
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