KUALA LUMPUR: Malaysian palm oil futures rose in first-half trade on Thursday, extending gains to their highest in more than two weeks, 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 0.8 percent at 2,182 ringgit ($537.70) a tonne at the midday break, its highest since March 4. It was headed for a fifth straight sessions of gains.
"Market is paying close attention to production and demand.
Earlier expectation of production increase is changing and exports are picking up," said a Kuala Lumpur-based trader, adding that the hot weather also portended slowing output in six months.
Top producers Indonesia and Malaysia saw a bumper harvest last year, flushing the market with palm oil and dampening prices.
Plans by the European Union to phase out the use of palm oil in renewable transport fuel by 2030 also added to concerns over stockpile.
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 0.17 percent against the dollar to its strongest level since last July.
"The ringgit has continued to appreciate after the U.S. Federal Reserve signalled no rate hike," said another trader.
Palm oil is expected to test a 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 soybean oil contract was last up 0.2 percent. The Dalian Commodity Exchange soyoil contract was 0.2 percent higher, and the palm olein contract was up 0.5 percent.
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