KUALA LUMPUR: Malaysian palm oil futures rose on Wednesday to snap a three-session slide, as traders covered their short positions amid poor weather conditions in the world’s second-largest producer, with strength in rival oils also lending support.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed 112 ringgit, or 3%, higher at 3,848 ringgit ($907.12) a metric ton, the highest single-session rise since July 24, 2023.
The recovery in palm oil was due to reduced production capacity caused by poor weather conditions, especially in the northern peninsular states, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“This resulted in short-covering in the market today,” Supramaniam said, referring to traders buying borrowed securities to close out open short positions at a profit or loss. Malaysia’s meteorology department on Tuesday issued a continuous rain warning for four states in the north of the country until Sept. 21, with other states forecast to experience thunderstorms, heavy rain and strong winds. Dalian’s most-active soyoil contract rose 1.43%, while its palm oil contract added 1.27%. Soyoil prices on the Chicago Board of Trade were up 1.18%.
Palm oil tracks price movements in rival edible oils as they compete for a share in the global vegetable oils market. Cargo surveyors estimated exports of Malaysian palm oil products during Sept. 1-15 rose between 9.1% and 10.2% from a month ago.
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