Malaysian palm oil futures recorded a fourth session of gains in five on Thursday, supported by expectations of lower output and better than forecast export demand. Palm also climbed to a five-month high in evening trade on bullish comments from leading analysts at an industry conference. It had dropped in the previous session after three days of gains.
Benchmark palm oil futures for December rose 1.8 percent to 2,725 ringgit ($664) a tonne at the close on the Bursa Malaysia Derivatives Exchange. It had earlier registered an intraday high of 2,729 ringgit, its highest since April 21. Traded volumes stood at 47,614 lots of 25 tonnes each, exceeding the 2015 average of 44,600. "The belief is that production is lower (on average) and exports on-month is quite good. The uptrend is still intact," one Kuala Lumpur trader said. Palm also rose strongly in the evening on comments by analysts at the Globoil India conference on Thursday.
Chairman of commodities consultancy LMC International James Fry had forecast that global palm oil output will rise by 4 million tonnes in the first half of next year, while the editor of Hamburg-based newsletter Oil World, Thomas Meilke, said that global palm oil supplies are insufficient to meet 2016/71 export demand.
Palm oil output has been rising in line with seasonal trends but at a lower level than previous years. Malaysian output in August rose 7.3 percent but registered its lowest August level since 2012, hit by crop damage from last year's El Nino. Malaysian September 1-20 palm oil shipments fell 11-12 percent versus the corresponding period last month, though traders had expected sharper declines. A bullish target at 2,761 ringgit a tonne remains intact for palm oil, said Wang Tao, a Reuters market analyst for commodities and energy technicals. In related oils, the Chicago Board of Trade's December soyabean oil contract rose 0.9 percent, while the January soyabean oil contract on the Dalian Commodity Exchange was up 0.3 percent.
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