KUALA LUMPUR: Malaysian palm oil futures soared on Friday for a fourth day, recording an 11 percent weekly jump, as dry weather conditions curbed the prospects of palm and US soybean production.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained 234 ringgit, or 6.67%, to 3,742 ringgit ($811.54) a metric ton, its highest close since May 9.
Palm oil estates in Sabah, Malaysia’s largest producing state of the commodity, are experiencing water stress from early signs of El Nino, cutting yields and exacerbating the impact of under-fertilising and labour shortages seen over the past three years.
In the United States, a stretch of dry weather following planting season has stressed crops across the Midwest, raising concerns that the forecasted record soybean harvest will fall below expectations.
Soyoil prices on the Chicago Board of Trade rose 1.4%. Dalian’s most-active soyoil contract jumped 5%, while its palm oil contract gained 6 percent.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
“Palm also got support from a rally in South American Soy oil FOB markets and bullish undercurrent in European rapeseed oil and Sunflower oil cash markets,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
On the physical front, Bagani said bullish palm oil purchases from top buyer India this week have helped the palm oil to find much-needed support and India’s latest sharp cut in base import prices of palm oil gave it an import duty advantage.