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Palm jumps nearly 2% on strength in rival oils

Malaysian palm oil futures rose nearly 2% on Wednesday, bouncing back from this week’s early declines, tracking rival oils on the Dalian and Chicago exchanges.

The benchmark palm oil contract FCPOc3 for October delivery on the Bursa Malaysia Derivatives Exchange rose 81 ringgit, or 1.96%, to 4,224 ringgit ($1,000.24) a tonne by the midday break, extending gains for a second straight session.

The market rebounded on technical buying after Monday’s sharp drop, a Kuala Lumpur-based trader said.

Palm oil fell nearly 6% on Monday after cargo surveyors reported a decline in July exports.

Refinitiv Commodities Research lowered its estimates for Malaysia’s production in the 2020/21 season to 18.2 million tonnes, down 1% from its last update, as labour shortages amid nationwide lockdowns remain a concern.

It raised its estimates for top producer Indonesia’s production to 48 million tonnes, up 1.5% from its last update.

“Despite the prevailing COVID-19 situation in the country, its impact on production is minimal so far, according to palm oil producers,” Refinitiv said in a note.

Dalian’s most-active soyoil contract DBYcv1 rose 1.6%, while its palm oil contract DCPcv1 climbed 3%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.6%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Investors are awaiting estimates for July supply and demand data, typically released ahead of Malaysian Palm Oil Board (MPOB) data scheduled for Aug. 11, for more direction.

Palm oil may consolidate in a narrow range of 4,105-4,197 ringgit per tonne for one or two days before falling again, Reuters technical analyst Wang Tao said. TECH/C
Source: Reuters (Reporting by Mei Mei Chu; Editing by Rashmi Aich and Amy Caren Daniel)

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