(March 9): Malaysian palm oil futures surged on Wednesday, as leading industry analysts raised concerns over production due to dry weather in key producing countries and forecast a rally in prices in coming months.
The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange ended up 1.15% at 2,558 ringgit (US$620.72) per tonne. The contract earlier rose to 2,563 ringgit, the highest since Feb 29.
El Nino weather is likely to hit palm plantations in top-producing Indonesia and Malaysia and reduce global supplies in 2016, leading edible oil analysts told an industry conference in in Kuala Lumpur on Wednesday.
"Analysts' comment over the production shortfall triggered buying," said a Kuala Lumpur-based trader.
Malaysian palm oil futures will climb nearly 20% to around 3,000 ringgit a tonne, as dry conditions brought by the El Nino weather pattern curb output in major producers, said top industry analyst Dorab Mistry.
James Fry, chairman of commodities consultancy LMC International, said global palm oil production could fall by over 2 million tonnes this year.
Palm oil prices are expected to recover to trade around 2,700-3,000 ringgit a tonne by June, Thomas Mielke, editor of Hamburg-based newsletter Oil World said.
Traded volume stood at 25,720 lots of 25 tonnes each, higher than the 20,334 lots traded on Tuesday.
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