Business Recorder (04/03/2020) -KUALA LUMPUR: Malaysian palm oil futures jumped 5% on Wednesday as buyers stocked up ahead of the Muslim holy month of Ramadan and expectations of 2019/2020 production falling also boosted prices.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed up 123 ringgit, or 5.17%, to 2,500 ringgit ($598.37), its highest level since Feb. 25.

“The market is higher on better buying prospects emerging from the Middle East and Africa, tied to Ramadan," said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.

Typically demand for palm oil picks up one or two months ahead of Ramadan as importers stock up on the commodity in anticipation of increased demand to prepare food for the festivities. Ramadan is scheduled to start on April 23.

The market will remain supported until the next supply and demand data from the Malaysian Palm Oil Board due on March 10, Paramalingam said.

Despite increasing output, Malaysia's 2019/20 palm oil production is expected to drop 4% from the year before due to a compounding effect of dry weather, prolonged drought and lower fertiliser usage, according to Refinitiv Agriculture Research.

Meanwhile, Dalian's most-active soyoil contract traded 0.95% higher, while its palm oil contract gained 0.84%. Soyoil prices on the Chicago Board of Trade were also 2.09% higher.

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

Elsewhere, rapeseed output in India, the world's biggest importer of vegetable oils, is likely to rise 4% this year as favourable weather boosted yields, a leading trade body said on Wednesday. Higher rapeseed output will help India cut back expensive imports of vegetable oil including palm oil.

Read more at https://www.brecorder.com/2020/03/04/576982/palm-oil-surge-5pc-on-ramadan-buying-forecast-of-lower-annual-production/