Malaysian palm oil futures closed lower on Friday after a US air strike in Baghdad stoked tensions in the Middle East, but recorded gains for a third straight week due to lower production. The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange closed to trade 13 ringgit lower, or 0.4%, to 3,117 ringgit ($760.15).
However, it ended the week 1.4% higher, continuing momentum from last week's 5.5% rise. "Prices were lower on profit-taking activities over worries about the escalating tension in the Middle East," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.
Malaysia's crude palm oil production for 2019-20 was forecast at 20.6 million MT, the US Department of Agriculture attache in Kuala Lumpur said, down 200,000 metric tonnes (MT) from its estimate in its previous quarterly report.
Palm oil prices soared nearly 44% in the final quarter of 2019 on declining stockpiles and expectations of a production drop in the first half of 2020 due to dry weather and lower fertiliser usage in top producers Malaysia and Indonesia. Dalian's most-active soyaoil contract rose 1.5%, while its palm oil contract dropped 1.2%.
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