KUALA LUMPUR: Malaysian palm oil futures closed higher for a second straight session on Wednesday, supported by a surge in exports during the first half of August, production worries and a weakening ringgit.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange gained 44 ringgit, or 1.16%, to 3,849 ringgit ($831.86) per metric ton, the highest closing since August 4.
A weakening ringgit and slower production growth for the first half of August in Peninsular Malaysia was the catalyst behind the massive price rally lately, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
There are also preliminary reports indicating hot and dry weather forecast in many areas of Indonesia, he added.
“In a nutshell, the market is in a consolidating phase and unless we see good improvement in production, prices will continue to remain defensive,” Paramalingam said.
Palm oil rallies over 3%, set to end three-session fall
Top producer Indonesia has set its crude palm oil (CPO) reference price lower at $820.35 per metric ton for Aug. 16-31, effectively keeping its CPO tax and levy unchanged, according to a trade ministry regulation.
Exports from Malaysia during Aug. 1-15 rose 18.9% from the same period in July, cargo surveyor Intertek Testing Services said on Tuesday. Another cargo surveyor, Amspec Agri, said exports jumped 24.2%.
The ringgit, palm’s currency of trade, continued its downward trajectory against the dollar for the fifth consecutive day, making the commodity cheaper for buyers holding foreign currency.
Dalian’s most-active soyoil contract gained 0.6%, while its palm oil contract jumped 1.9%. Soyoil prices on the Chicago Board of Trade were up 1.3%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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