Palm oil jumps three percent

Malaysian palm oil closed almost three percent higher on Monday, climbing to a two-month high, with the market driven up by strong gains in rival soyaoil prices and fears that dryness due to the El Nino weather pattern will cut yields. Chicago soyaoil futures jumped almost four percent in the last session to their highest since late July on expectations that the US Department of Agriculture will this week cut its production forecast and on signs of strong Chinese demand.
"Friday's soybean oil price action has lifted palm oil market today," said one Kuala Lumpur-based trader. "But people will now wait to see the MPOB data before taking their trading decisions." The February benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed up 2.9 percent, or 69 ringgit, to 2,435 ringgit ($578) a tonne. It climbed to an intra-day high of 2,438 ringgit, the highest since October 6.
Traded volume stood at 44,782 lots of 25 tonnes each. In the USDA monthly supply and demand report due on Wednesday, the government is expected to slash its soy supply forecast. A key monthly indicator for El Nino has reached a level not seen since 1997, according to the US weather agency, when the weather pattern caused heavy rains and flooding in parts of South America and severe drought hit crops in Indonesia.
Investors in the palm oil market are eyeing a monthly report from the Malaysian Palm Oil Board on stocks, output and exports in the world's second largest producer of the tropical product. It is due on Wednesday after 0430 GMT. Malaysian November palm stocks likely topped a previously reached near 15-year high on slowing exports, despite output falling in line with a year-end seasonal trend, a Reuters poll showed.
Energy prices continued to give bearish signals. Oil prices edged closer to 2015 lows on Monday after Opec failed to agree on a production curb to stem sliding prices and a stronger dollar made it more expensive to hold crude positions. Palm oil sometimes takes price direction from the crude oil market because of increasing use of vegetable oils in making renewable fuels which compete with fuels refined from crude.