KUALA LUMPUR: Malaysian palm oil futures extended gains on Monday for a fourth straight session, tracking strength in rival edible oils, but output concerns amid poor weather conditions in the world’s second-biggest producer capped the rise.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was up 30 ringgit, or 0.76%, at 3,977 ringgit ($946.90) a metric ton by the close.
The contract traded as high as 4,040 ringgit a ton earlier in the session before paring back the gains following news that Indian refiners cancelled 100,000 metric tons of palm oil purchases for delivery between October and December.
The palm oil market is continuing an upward trajectory in line with the strength of rival edible oils, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
However, the unfavourable weather conditions in northern peninsular Malaysia coupled with the heatwave in South America are keeping the market vulnerable, he said.
Last Friday, Malaysia’s meteorological department said the monsoon season is expected to begin on Tuesday and will last until early November.
Palm oil rises for third session
Storms and a high risk of flooding during the year-end monsoon season are likely to disrupt harvesting activities and hurt production in the world’s second-largest palm producer.
Dalian’s most-active soyoil contract rose 0.23%, while its palm oil contract added 0.93%. Soyoil prices on the Chicago Board of Trade were up 1.02%.
Palm oil tracks the price movements of rival edible oils, as they compete for a share of the global vegetable oils market.
Oil prices rose slightly on Monday after last week’s cut to U.S. interest rates and a dip in U.S. crude supply in the aftermath of Hurricane Francine countered weaker demand from top oil importer China.
Brent crude futures for November were up 0.2% at $74.64 a barrel at 1002 GMT. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, was unchanged against the dollar. A firmer ringgit makes the commodity more expensive for buyers holding foreign currencies and caps its gains.
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