Palm oil hits twoyear high, spurred by output worries
KUALA LUMPUR: Malaysian palm oil futures surged to a twoyear high on Monday, rising for a sixth session out of eight, on persistent worries that a cropdamaging El Nino weather event would curb yields.
Palm oil experts had forecast at a Kuala Lumpur industry conference earlier in March that benchmark prices could soar to as much as 3,000 ringgit a tonne by mid-year, up around 10 per cent from current levels, due to the El Nino.
“The market is technically still speculative. It’s still reacting to bullish news, as was spoken at the conference,” said a trader from a brokerage firm in Kuala Lumpur. “Price levels of 3,000 ringgit is coming, but you also have to look at the overall scenario of the market, including demand.”
The palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 1.1per cent to reach 2,752 ringgit (US$684) per tonne by midday. It earlier hit 2,759 ringgit, the strongest since March 21, 2014. Traded volumes were 21,967 lots of 25 tonnes each.
Leading vegetable oils analyst Dorab Mistry estimated on Monday that annual palm output from Malaysia, the world’s second largest grower after Indonesia, will fall by 2 million tonnes in the oil year ending September 2016.
Mistry maintained his estimate for Indonesian palm production to fall by 1.2 million tonnes.
Technical charts show palm oil could rise to 2,776 ringgit over the next 24 hours, as it has cleared a resistance at 2,729 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In competing vegetable oil markets, the September soybean oil contract on the Dalian Commodity Exchange gained 1.1 per cent, and the May Chicago Board of Trade soyoil contract gained 1 per cent. — Reuters