Malaysian palm oil futures hit a more than two week high on Thursday as easing concerns about high output and expectations of better export demand buoyed investor sentiment. The benchmark third-month palm oil contract on the Bursa Malaysia Derivatives Exchange was up 0.4 percent at 2,172 ringgit ($534.98) a tonne, locking in a fifth straight session of gains after earlier hitting its highest level since March 4.
"Earlier expectations of a production increase is changing and exports are picking up," said a Kuala Lumpur-based trader, adding that hot weather could also lead to slowing output. Top producers Indonesia and Malaysia had a bumper harvest last year, flushing the market with palm oil and dampening prices. And European Union plans to phase out palm oil in renewable transport fuel by 2030 have added to concerns.
Cargo surveyor Societe Generale de Surveillance reported on Wednesday a rise of 0.8 percent in exports of Malaysian palm oil products for the March 1-20 period compared to the same period a month ago. Meanwhile, a stronger ringgit made the vegetable oil less attractive to buyers holding foreign currencies, limiting the gains in palm oil prices.
The ringgit rose as much as 0.3 percent against the dollar to its strongest level since last July. "The ringgit has continued to appreciate after the US Federal Reserve signalled no rate hike," said another trader.
Palm oil is expected to test resistance at 2,190 ringgit per tonne, a break above which could lead to a gain to 2,227 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals. The Chicago soyabean oil contract was last up 0.4 percent. The Dalian Commodity Exchange soyaoil contract was 0.3 percent higher, and the palm olein contract was up 0.6 percent.
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