Malaysian palm oil futures hit a fresh one-year high on Friday, as strong Asian demand coupled with lower production expectations supported prices for a fifth consecutive session. Both Malaysia and Indonesia, which account for the lion's share of global palm oil production, are entering their monsoon weather season, traders and analysts say, with output also likely to be dented by a lower production cycle as yields have eased from last year.
The benchmark January contract on the Bursa Malaysia Derivatives Exchange ended 1.2 percent higher at 2,623 ringgit ($830) per tonne. Earlier, benchmark prices rose to 2,632 ringgit, their highest since September 28, 2012. It was also their biggest weekly gain since December 2010 and have risen about 8 percent so far this year.
"The market is holding very well," said a trader with a foreign commodities brokerage in Kuala Lumpur. "We are not going to have high production, due to wet weather conditions. Also supporting palm prices, said one analyst, was a new regulation in Indonesia, which caps palm plantation areas at 100,000 hectares. In competing vegetable oil markets, the US soyaoil contract for December rose 0.9 percent in early Asian trade. The most-active May soybean oil contract on the Dalian Commodities Exchange gained by 1.2 percent.
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