Palm oil closes at over one-week high on global supply worries

Malaysian palm oil futures closed at a more than one-week high on Thursday due to concerns over tight edible oil supply worldwide, though weak August exports and a firmer ringgit capped gains.

The ringgit =MYR, palm’s currency of trade, rose 0.21% against the dollar, making the commodity more expensive for holders of foreign currency.

The benchmark palm oil contract FCPOc3 for November delivery on the Bursa Malaysia Derivatives Exchange ended up 26 ringgit, or 0.6%, at 4,390 ringgit ($1,046.98) a tonne, its highest closing since Aug. 17.

Palm started the day higher, but could not sustain the momentum due to the absence of fresh news, and weighed down by a firmer ringgit, Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics said.

Top producer Indonesia’s plans to raise the mandatory bio-content in its palm oil-based biodiesel to 40% may face further delays, after the high price of the vegetable oil has made the programme too costly, a senior government official told Reuters.

Exports of Malaysian palm oil products for Aug. 1-25 fell 13% from a month before, cargo surveyor Societe Generale de Surveillance said on Wednesday.

Dryness over the next six months in Argentina is expected to reduce the size of the country’s two main cash crops, corn and soy, while complicating navigation of grain cargo ships on the Parana River, analysts said.

The U.S. Department of Agriculture reported on Monday a weekly decline in crop conditions as severely hot weather was forecast for the heart of the Midwest crop belt, though beneficial rainfall eased some concerns.

Soyoil prices on the Chicago Board of Trade BOcv1 fell 0.9%, after rising 1% in the previous session. Dalian’s most-active soyoil contract DBYcv1 rose 0.5%, while its palm oil contract DCPcv1 was up 0.3%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Source: Reuters (Reporting by Mei Mei Chu; Editing by Sherry Jacob-Phillips and Vinay Dwivedi)