Palm ends higher on rival oils strength, production worries
02/07/2024 (Reuters), Jakarta - Malaysian palm oil futures closed higher, extended gains to a fifth consecutive session on Tuesday, underpinned by concerns about weak production and tracking a rise in rival oils.
The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange was up 111 ringgit, or 2.79%, to 4,090 ringgit ($867.08) a metric ton on the closing.
"Futures are reacting to Dalian palm oils buying interest on the back of a forecast of lower production for this month," a Kuala Lumpur-based trader said.
Production in Malaysia from June 1-20 is forecast to decline 6.3% from a year-ago period, traders and analysts said, citing data from the Malaysian Palm Oil Association.
Dalian's most-active soyoil contract DBYcv1 rose 2.11%, while its palm oil contract DCPcv1 gained 2.75%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.98%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Cargo surveyor Societe Generale de Surveillance (SGS) estimates exports of Malaysian palm oil products for June at 1,202,864 metric tons, up from 1,161,370 metric tons shipped during May.
AmSpec Agri estimated the exports fell 15.4% to 1,188,180 tons.
Meanwhile, India is likely to receive above-average rainfall in July after receiving 11% below average in June, the weather department said, keeping alive the possibility of higher farm output and economic growth in Asia's third-biggest economy.
Oil prices were little changed on Tuesday, trading near two-month highs reached in the previous session on expectations of rising demand during the summer driving season and possible supply disruptions from Hurricane Beryl. O/R
Higher crude oil futures make palm a more attractive option for biodiesel feedstock.
($1 = 4.7170 ringgit)