Malaysian palm oil futures hit a near two-week high on Wednesday, marking a second straight day of gains amid an uncertain production outlook and forecasts for a soyaoil rally. Palm oil production typically rises in March from February. However, industry players are uncertain about how much production will pick up this month as palm oil trees still face the brunt of a crop-damaging El Nino, which reduces yields of fresh fruit bunches.
Benchmark palm oil futures for June delivery on the Bursa Malaysia Derivatives Exchange closed up 0.7 percent at 2,829 ringgit ($639) a tonne. Earlier in the session, they hit 2,839 ringgit a tonne, their highest since March 9. Traded volumes for the day totalled 40,762 lots of 25 tonnes each. Also supporting palm oil were expectations for a rise in soyaoil prices after 2017 US biofuel requirements came into effect.
"The market is most likely anticipating a soyaoil rally later, and this stage of our production is still slow, providing some short-term support," said a futures trader from Kuala Lumpur. He expects the market to be range bound until the end of the month. Malaysian palm oil exports fell between March 1 and March 20 compared with a month ago. Cargo surveyor Intertek Testing Services reported a 3 percent drop, while Societe Generale de Surveillance saw a decline of 7.9 percent.
Palm oil is expected to break resistance at 2,810 ringgit per tonne and rise towards the next resistance at 2,880 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals. Palm oil prices are also affected by movements in related vegetable oils. Soyabean oil on the Chicago Board of Trade was up 0.03 percent, while the September soyabean oil contract on the Dalian Commodity Exchange fell 0.3 percent. The September contract for palm olein on the Dalian Commodity Exchange gained 0.4 percent.
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