Malaysian palm oil futures hit a two-week high on Wednesday after Indonesia, the world's top producer, cut its output estimates for next year, as the effects of the El Nino dry weather pattern offsets higher yields from maturing trees. The benchmark December palm oil contract on the Bursa Malaysia Derivatives Exchange gained 2 percent to reach 2,366 ringgit ($553.45) a tonne, after rising to an intraday high of 2,372 ringgit, its highest since October 7.
"There is a growing concern among the palm fraternity... that we haven't seen significant monsoon activity," said a trader based in Kuala Lumpur. "If this continues, prices might start to go higher... They will still continue to trade in a range but the bottom part of the range will go higher." Traded volume stood at 43,101 lots of 25 tonnes each, above the average 35,000 lots usually traded in a day.
Indonesia's crude palm oil output is expected to rise to 33 million tonnes in 2016, the Indonesian Palm Oil Board said on Tuesday, against the 33.5 million initially estimated and the 31.5 million forecast for this year. A weaker ringgit may also have lent some support to palm prices, making it cheaper for holders of other currencies. The currency continued its slide as a slowing Chinese economy dampened commodity prices and the dollar firmed, losing 0.4 percent against the dollar in late trade on Wednesday.
Palm oil is expected to test a resistance at 2,367 ringgit per tonne, a break above which could lead to a gain to 2,402 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao. In other vegetable oil markets, the US December soyoil contract rose 1 percent and the January soybean oil contract on the Dalian Commodity Exchange gained 0.4 percent.
Comments
Comments are closed.