Malaysian palm oil futures jumped 2.7 percent on Friday, rising to a two-month high as forecasts of rain in key producing areas heightened concerns over supply disruptions in the monsoon season. The palm oil market dropped to a one-week low on Thursday due to a steep decline in exports. Analysts and traders expect the market to gain more ground early next year as the El Nino weather pattern reduces yields and Indonesia, the world's top producer, uses more palm oil to make biodiesel.
The February benchmark palm oil contract on the Bursa Malaysia Derivatives exchange closed up 2.7 percent, or 63 ringgit, to 2,440 ringgit ($568.8) a tonne. The market hit an intra-day high of 2,442 ringgit a tonne, highest since October 6. For the week, palm oil is up more than three percent, rising for a third week in a row. Traded volume stood at 38,406 lots of 25 tonnes each. "It is short-covering which has supported prices," said one trader in Kuala Lumpur. "The weather is going to be wet next week, it will make it difficult to gather fresh fruit bunches."
Cargo surveyor Intertek Testing Services estimated exports of Malaysian palm oil products for December 1-10 fell 35.5 percent from a month earlier, while Societe Generale de Surveillance reported a 33.7 percent decline in exports. Malaysia's monthly palm oil data on Thursday showed steep decline in production as well as exports in November. Palm oil stocks in Malaysia, the world's second largest producer, rose to 2.91 million tonnes from a revised 2.835 million tonnes a month ago, while exports fell 12.4 percent to 1.5 million tonnes in November.
The MPOB data also showed an 18.87 percent fall in November production at 1.65 million tonnes. In rival vegetable oil markets, the US January soyoil contract declined 0.1 pct, while the May soybean oil contract on the Dalian Commodity Exchange added 0.3 percent.
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