Malaysian palm oil futures hit their highest in nearly three weeks on Monday, rising for a second session, as tight supplies and a firmer overseas palm olein market underpinned prices. Benchmark palm oil futures for November on the Bursa Malaysia Derivatives Exchange rose by 1.9 percent to 2,644 ringgit ($650) per tonne at the end of the trading day, off the day's high of 2,658 ringgit - the strongest since August 17.
Traded volumes stood at 58,841 lots of 25 tonnes each on Monday evening, higher than the 2015 average of 44,600. On Friday, palm oil futures had risen almost 3 percent, the biggest daily gain since mid-August, lifted by a weaker ringgit and firmer rival oils.
"The market is up on stronger palm olein ... Nearby tightness is still evident," said a trader from Kuala Lumpur. The January contract for palm olein on China's Dalian Commodity Exchange surged 3.2 percent on Monday evening. Palm oil output in Malaysia, the world's second-largest producer after Indonesia, has been hit this year due to the impact of dryness linked to an El Nino weather pattern.
Output in July rose 3.5 percent from June to 1.59 million tonnes, the strongest in eight months but the weakest July levels in six years. Palm oil is expected to revisit its August 17 high of 2,668 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals. In other related vegetable oils, the January soyabean oil contract on the Dalian Commodity Exchange rose 1 percent.
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