(May 26): Malaysian palm oil futures rose on Thursday to record a third session of gains this week, amid expectations of slow output growth and sustained Ramadan demand.
The palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange rose 1.4% to RM2,579 (US$632) per tonne in the evening. It earlier reached an intra-day high of RM2,595, its highest in a week.
Palm suffered losses in the last two weeks, impacted by the sell-off in China's commodities markets and hitting a near three-month low on Monday, tracking weak rival Chinese oils.
Traded volumes stood at 45,999 lots of 25 tonnes each at the close of trade, compared with a 2015 daily average of 44,600.
"Production is not going up drastically, and we have seen some growth in demand, which will continue in June," said a trader from Kuala Lumpur.
"While peak demand is a month before Ramadan, it will stay on until mid June."
Better demand for palm oil and lower-than-expected output will dent current stockpile levels, helping to support benchmark prices. Malaysia's palm oil inventories stood at 1.8 million tonnes at the end of April.
While a dry weather El Nino is seen impacting output in top producers Indonesia and Malaysia, an impending La Nina, which brings wet weather across Asia, could reverse the trend. Palm oil production is also set to rise this quarter in line with the seasonal trend.
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