Palm extends gains on rival oils; poor weather prompts output concerns in Malaysia

KUALA LUMPUR: Malaysian palm oil futures rose on Monday for a fourth consecutive session, buoyed by gains in rival edible oils, although the market remained vulnerable to output concerns amid poor weather conditions in the world’s second-biggest producer.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 87 ringgit, or 2.2%, to 4,034 ringgit ($958.88) a metric ton by the midday break.

The contract gained 3.5% last week after falling for two consecutive weeks.

The palm oil market is continuing an upward trajectory in line with the strength of rival edible oils, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

However, the unfavourable weather conditions in northern peninsular Malaysia coupled with the heatwave in South America are keeping the market vulnerable, he said.

Last Friday, Malaysia’s meteorological department said the monsoon season is expected to begin on Tuesday and will last until early November.

Storms and a high risk of flooding during the year-end monsoon season are likely to disrupt harvesting activities and hurt production in the world’s second-largest palm producer.

Palm oil rises for third session

Dalian’s most-active soyoil contract rose 0.58%, while its palm oil contract added 1.59%. Soyoil prices on the Chicago Board of Trade were up 1.23%.

Palm oil tracks the price movements of rival edible oils, as they compete for a share of the global vegetable oils market.

Oil prices gained slightly during early trade on Monday, boosted by concerns that conflict in the Middle East may impact supply in the key producing region and expectations the U.S. interest rate cut last week will support demand.

Brent crude futures for November were up 0.82% at $75.10 a barrel at 0444 GMT. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, weakened 0.17% against the dollar, making the commodity less expensive for buyers holding foreign currencies.

Palm oil may revisit its Aug. 30 high of 4,003 ringgit per metric ton, driven by a powerful wave c, Reuters technical analyst Wang Tao said.