Malaysian palm oil futures rose for a fourth consecutive session on Thursday, hitting their highest in more than two weeks, on expectations of lower production following hot and dry weather brought on by the El Nino weather pattern.
Purchases by palm oil importers, including top buyer India, are running behind schedule and a rush to cover supplies could stoke further gains in the market that has climbed 11 percent this year, traders said.
The palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed 0.9 percent higher at 2,734 ringgit ($703.2) per tonne. It earlier climbed to 2,743 ringgit a tonne, the highest since April 5.
Traded volumes stood at 47,508 lots of 25 tonnes each.
"Our prognosis is that with lower production and higher consumption of biodiesel this year, the stage is set for the next rally and prices can range between 2,800-2,900 ringgit in the second quarter," said a Kuala Lumpur-based trader.
"Consumers, especially our main buyers, have not covered enough - Pakistan, Bangladesh and India. It will be a supply driven push initially before demand kicks in."
Exports of Malaysian palm oil products for April 1-20 rose 0.9 percent to 724,169 tonnes from 717,670 tonnes shipped during March 1-20, cargo surveyor Societe Generale de Surveillance said earlier this week.
Malaysian palm oil inventories in March fell below 2 million tonnes for the first time in a year as buyers rushed to stock up on the tropical oil before a tax on exports kicked in, offsetting a seasonal jump in output.
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