Palm hits near 3-year high on supply shortage worries

• Palm oil continued to overtake soyoil prices on the Chicago Board of Trade for the second straight session.
• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed 1.6pc higher at 2,904 ringgit ($696.40), the highest price since Feb. 16, 2017.

A Reuters poll on Thursday forecast Malaysian palm oil production would show a 10pc monthly fall in November, but traders said they now expect it to fall as much as 13pc, driving prices higher.

Dry weather and lower fertiliser use, a move adopted by some growers to save costs, have affected output this year at top producers Indonesia and Malaysia, and will continue to be a factor in the coming years, industry analyst James Fry said last month.

Malaysian Palm Oil Board will release official data on Dec. 10.

Palm oil continued to overtake soyoil prices on the Chicago Board of Trade for the second straight session, and was last up 0.7pc at $693.4 per tonne.

The last time palm oil was more expensive than soyoil was in February 2011.

Gains in rival oils on the Dalian Commodity Exchange also helped the rally in palm oil prices.

Dalian's January soyoil contract last traded 1.4pc higher, while its palm oil contract rose 3.1pc.

Rival oils on the Dalian exchange rallied on palm oil supply concerns in Malaysia and Indonesia, as well as soyoil in Argentina, said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.