Palm closes near 3-wk high on production concerns after Malaysia floods
Malaysian palm oil futures on Monday closed at their highest in nearly three weeks on concerns over output, following flooding in the world’s second largest producer.
The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange gained 28, or 0.72%, to 3,930 ringgit ($926.45) a tonne. The contract rose for a third straight session to close at its highest since Jan. 10.
Farmers in Malaysia’s southern state of Johor are worried that stagnant flood waters would affect their palm oil yields, after heavy rains last week displaced thousands of people in several palm oil producing states, according to state news agency Bernama.
Chinese markets opening sharply higher after the Lunar New Year holidays and talks about Indonesia further reducing its domestic palm oil sales ratio also supported prices, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Dalian’s most-active soyoil contract DBYcv1 rose 1.5%, while its palm oil contract DCPcv1 gained 1.8%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 1.4%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil fell, giving up earlier gains, as looming interest rate hikes by major central banks and signs of strong Russian exports offset rising Middle East tension over a drone attack in Iran and hopes of higher Chinese demand.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Subhranshu Sahu and Vinay Dwivedi)