JAKARTA: Malaysian palm oil futures closed sharply higher on Friday and posted a 1.6% weekly gains amid fears of production cuts at key palm oil areas in Malaysia.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange added 147 ringgit, or 3.28%, to close at 4,627 ringgit ($1,048.73) a metric ton.
“The futures were seen trading sharply higher amidst fears of a production cut at key palm oil areas in Malaysia, bargain-buying coupled with heavy short-covering,” said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
Palm oil plantations in two states of Malaysia, the world’s second-biggest producer of the commodity, have been hit by infestations, a minister said, as the country recovers from floods that have also disrupted production.
Malaysia’s February palm oil inventories are estimated to have fallen to their lowest in nearly three years due to the floods, a Reuters survey showed. Indonesia exported 29.5 million metric tons of palm oil products last year, an 8.3% drop on-year, per data released on Thursday by GAPKI, the Indonesia Palm Oil Association.
Meanwhile, India bought a decent amount of palm oil this week, following lower-than-normal purchases in January and February, which had sharply reduced stock levels, said a Mumbai-based dealer. India’s palm oil imports rose 36% on-month in February after falling to their lowest since March 2011 in January.
Dalian’s most-active soyoil contract gained 1.48% after data on Thursday showed US soyoil exports in January hit a 15-year high. Its palm oil contract added 2.89%, while soyoil on the Chicago Board of Trade (CBOT) fell 0.35%.
Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market. The ringgit, palm’s currency of trade, strengthened 0.38% against the US dollar, making the commodity more expensive for buyers.
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