#PALMOIL
(Aug 17): Malaysian palm oil futures notched up their strongest gains in over 10 months, closing more than 4% higher on Wednesday, as tight supplies lent support to the market.
A stronger ringgit and a technical correction led palm to snap two consecutive days of gains in its previous session, having earlier climbed to a 10-week high tracking firmer exports and rival oils.
A stronger ringgit, palm's traded currency, usually makes the vegetable oil more expensive for foreign currency holders.
Benchmark palm oil futures for October on the Bursa Malaysia Derivatives Exchange rose 4.1% to RM2,643 (US$659) per tonne at the end of the trading day, charting a third session of gains in four.
It earlier reached an intraday high of RM2,668, its strongest gain since last Sept. 25 and its highest levels since June 7.
Traded volumes stood at 76,039 lots of 25 tonnes each on Tuesday evening, surpassing the 2015 average of 44,600.
The share of palm oil in India's growing edible oil imports is likely to reach a record low this marketing year as palm's price rally slashes its discount over soyoil.
"There is tightness in supply... because of the El Nino effect," said a trader based in Kuala Lumpur, adding that he expected the trend to continue for another month.
"Hopefully demand doesn't propel (prices upwards) as now soy prices are also going up."
Another trader said today's public holiday in Indonesia reduced the number of sellers in the market, adding to the existing squeeze in supply.
Palm oil output in Malaysia, the world's second-largest producer, rose 3.5% month-on-month in July to 1.59 million tonnes. Production, however, was at its weakest July level in six years due to El Nino's dry weather effects.
The weather phenomenon brings scorching heat across Southeast Asia, damaging crops and lowering palm yields in top palm producers Indonesia and Malaysia.
In related vegetable oils, the January soybean oil contract on the Dalian Commodity Exchange was up 0.5%, while the Chicago Board of Trade soybean oil December contract rose 1.7%.
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