Palm jumps 3pc on easing output, short covering

KUALA LUMPUR: Malaysian palm oil futures gained more than 3 percent at the close of trade on Friday, snapping five previous losing sessions, supported by short covering and forecasts of falling February production versus the previous month.

Strength in related edible oils and a weaker ringgit had also added to palm's gains earlier in the day.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange jumped 3.2 percent to 2,189 ringgit ($537.57) a tonne at the close of trade, its biggest daily gain since Oct. 2016.

The market, however, fell 3 percent on week, following a decline to its lowest levels in two months in the previous trading session.

Trading volumes stood at 56,850 lots of 25 tonnes each at the end of the trading day. <1FCPO-TOT>

"Forecasts of easing production fueled the market, but it was largely short covering this evening," said a Kuala Lumpur-based trader, referring to expectations of February palm production falling from the previous month in line with seasonal trend.

Another trader said during the first half of trade that firmer external markets and a weaker ringgit lent palm support.

A weaker ringgit, palm's traded currency, usually makes the edible oil cheaper for holders of foreign currencies. The ringgit was last down 0.2 percent against the dollar at 4.0720.

In other related oils, the Chicago March soybean oil contract was last up 0.7 percent on Friday.

The May soyoil contract on the Dalian Commodity Exchange gained 1.5 percent and the Dalian May palm oil contract rose 1.5 percent.

Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.