MUMBAI: Malaysian palm oil futures extended gains on Friday, with market participants worried about a likely decline in December output in top producing countries because of dry weather, and falling stocks.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange rose 10 ringgit, or 0.27%, to 3,698 ringgit ($792.71) by the midday break.
“The market is receiving support from higher-than-expected production losses in both Malaysia and Indonesia,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Bargain buying following a recovery in Chinese palm olein futures was also supporting Malaysian futures, he said. Malaysia’s palm oil stocks at the end of November fell for the first time in seven months as production slumped more than exports, data from industry regulator showed on Tuesday.
Indonesia plans to set its crude palm oil (CPO) reference price at $767.51 per metric ton for the Dec. 16-31 period, a trade ministry official said on Thursday, down from $795.14 in the first half of the month.
Soyoil futures on the Chicago Board of Trade were up 0.56%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil’s gains were capped by slowing exports from Malaysia, said a Mumbai-based trader.
Palm posts biggest daily drop in 7 weeks on slowing exports
Exports of Malaysian palm oil products in the first half of the month fell 13.6% from a month earlier to 591,490 metric tons, cargo surveyor Intertek Testing Services said on Friday.
Palm oil may bounce into a range of 3,775-3,781 ringgit per ton, driven by a wave c, Reuters’ technical analyst Wang Tao said.
Oil prices rose in early Asian trade, on track for their first weekly rise in two months after benefiting from a bullish forecast from the International Energy Agency (IEA) on oil demand for next year and a weaker dollar.
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