Malaysian palm oil futures gained 1.56 percent on Thursday, rising for seven out of eight sessions with prices underpinned by expectations of lower production in October and forecasts of higher purchases by top consumer India. By Thursday's close, the benchmark December contract on the Bursa Malaysia Derivatives exchange was up 1.56 percent at 2,412 ringgit ($547.68) a tonne. The market, which has rallied almost 20 percent this month, jumped to a 15-month high of 2,460 ringgit earlier this week, and traded in a range between 2,360 and 2,445 ringgit on Thursday.
"The market is being supported by weaker ringgit and likelihood of lower output in October," said one Kuala Lumpur-based broker. "We had some bullish projections on prices and demand at Mumbai conference," he added, referring to the Globoil conference in India. Traded volume stood at 68,616 lots of 25 tonnes each, roughly double the average 35,000 lots usually traded daily.
Worries about an El Nino weather pattern, which brings drought to Southeast Asia, are underpinning prices. Separately, an industry group in Indonesia said production in the world's top palm producer would fall by as much as 5 percent in 2016 due to El Nino. At the same time demand is rising. India's palm oil imports are likely to rise 6.2 percent to a record 9.6 million tonnes in the year starting November, as the first back-to-back drought in three decades restricts supplies amid a rise in consumption.
On the technical front, palm oil is expected to retest resistance at 2,464 ringgit per tonne as it has found support around 2,349 ringgit, according to Wang Tao Reuters market analyst for commodities and energy technicals. In competing vegetable oil markets, the US December soyoil contract was down 0.1 percent in Asian trading.
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