Malaysian palm oil futures rose to a near three-month high on Monday, as a weaker ringgit and concerns that drier weather could curb output boosted prices. The benchmark palm oil contract for March on the Bursa Malaysia Derivatives Exchange ended 1.6 percent higher at 2,441 ringgit ($568.07) a tonne. It earlier touched 2,457 ringgit, its highest since September 29.
Traded volume stood at 35,603 lots of 25 tonnes each at the end of the trading day. "There's a lot of people factoring in the weather," said a Kuala Lumpur-based trader, referring to an El Nino weather event which brings dry conditions to Southeast Asia and lowers palm's productivity. "We will see its effects in the second quarter (of 2016). The year-end monsoon season isn't affecting palm too much at the moment, we aren't seeing too much rain."
A key monthly indicator for El Nino has reached a level not seen since 1997, according to the US weather agency. Leading analysts earlier forecast that lower output as a result of the dry weather will boost palm prices next year. The ringgit, the currency palm is traded in, fell 0.2 percent against the dollar on Monday, lending some support to palm. A weakening ringgit usually boosts palm prices as it makes the tropical oil cheaper for holders of foreign currencies.
High production and low exports have been keeping palm trading rangebound in recent weeks. Palm shipments from two cargo surveyors showed on Monday a near 25 percent drop in exports from December 1-20 compared with the same time a month ago. In competing vegetable oil markets, the US January soyoil contract rose 0.9 percent, while the May soybean oil contract on the Dalian Commodity Exchange gained 1.9 percent.
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