Malaysian palm oil futures jumped in Asian evening trade on Friday, rebounding from losses a day ago, as low supply concerns and bullish price sentiments from an industry conference fuelled the market rally. Experts at an industry conference in Kuala Lumpur on Wednesday had forecast palm to trade at 2,700-3,000 ringgit per tonne by June as a crop-damaging El Nino is expected to impact yields and lower annual output growth.
The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange surged 2.4 percent to 2,608 ringgit ($638) per tonne at the end of the trading day. It earlier reached a new three-week and intraday high of 2,612 ringgit. Traded volume stood at 48,005 lots of 25 tonnes each on Friday.
"It's a supply driven rally, aided and abetted by speculative buying and massive short covering," said a trader from Kuala Lumpur. An El Nino weather event brings heavy rains to South America but scorching heat across Southeast Asia, reducing palm's fresh fruit yields and lowering production. Analysts at the Kuala Lumpur conference forecast that global production for palm oil would fall by 2-3 million tonnes. Government data from Malaysia, the world's second largest producer of palm, showed that February output fell to its lowest since 2007 at 1.04 million tonnes, a 7.7 percent decline from a month ago.
Comments
Comments are closed.