(March 22): Malaysian palm oil futures rose to a two-year high on Tuesday, stretching gains into a fourth session, as improving exports and worries about lower output due to an El Nino weather pattern underpinned prices.
Palm oil prices have risen more than 8% this year and industry experts see gains of up to another 10% from current levels by June, driven by forecasts global output will drop by 2–3 million tonnes in 2016 as dryness linked to El Nino hurts yields.
The palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 1% to reach RM2,712 (US$678) per tonne in closing trade.
Trade volumes were 45,656 lots of 25 tonnes each, versus a 2015 average of 44,600 lots traded in a day.
The contract hit RM2,726 earlier in the day, breaching the previous two-year top of RM2,706 reached on Monday. Technicals show palm prices could test resistance at RM2,729 and rise further to RM2,776.
A trader based in Kuala Lumpur attributed Tuesday's gains to a rise in competing soyoil markets and dryness linked to El Nino. Prices are also drawing support on indications of a pick-up in exports ahead of an April tax, the trader added.
Malaysia, the world's No.2 producer of palm after Indonesia, raised its tax on crude palm oil exports to 5% for April, ending a duty-free policy held since May 2015 and encouraging buyers to stock up before the tariff kicks in.
Cargo surveyor data show exports of Malaysian palm oil products rose 20%–23% over March 1–20, compared with the same period last month, led by stronger demand from India.
In competing vegetable oil markets, the September soybean oil contract on the Dalian Commodity Exchange gained 0.8%, while the May Chicago Board of Trade soyoil contract rose 0.5%.
Crude palm kernel oil's offer price stood at RM5,291.07 per tonne on Tuesday evening, according to assessment prices by Thomson Reuters. Traders say prices surged in recent weeks due to tight supplies as El Nino also dented output of crude palm kernel oil.
"There was some hot and dry weather which affected crops this year. It affected production big-time, not only in palm but also in kernel oil," said another trader from Kuala Lumpur, adding that kernel oil's prices typically rally higher than CPO's due to its less liquid market.
No comments:
Post a Comment