Malaysian palm oil futures rose over 1 percent on Wednesday evening, a third straight day of gains, on the back of technical buying and as the market turned bullish on forecasts that the world's top palm importer India is likely to receive below-normal monsoon rains in 2018.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was 0.8 percent higher at 2,212 ringgit ($544.29) a tonne at the end of the trading day. It earlier rose as much as 1.1 percent to 2,219 ringgit, its strongest levels since July 19.
Trading volume stood at 39,245 lots of 25 tonnes each at the close of trade. "The market is most likely short covering after a failure to go lower, and is also up on India's weather play which will likely reduce their crop and they will need to import more," said a Kuala Lumpur-based trader. A private weather forecaster said on Wednesday that India is likely to receive below-normal monsoon rains in 2018, raising concerns over farm output and economic growth in Asia's third-biggest economy, where half the farmland lacks irrigation.
India's 260 million farmers depend on monsoon rains to grow crops such as rice, sugar cane, corn, cotton and soyabeans.
In other related oils, the Chicago December soyabean oil contract declined 0.3 percent, while the September soyabean oil contract on China's Dalian Commodity Exchange edged up 0.04 percent.
The Dalian September palm oil contract was also up 0.04 percent. Palm oil prices are influenced by the performance of other edible oils as they compete for a share in the global vegetable oils market.
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