Malaysian palm oil futures rose over 1 percent in their second half of trading on Wednesday, charting a third consecutive session of gains, as bullish sentiment on declining production lifted the market. The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 1.1 percent to 2,521 ringgit ($644.59) a tonne at the end of the trading day. It rose earlier to an intraday high of 2,526 ringgit, its strongest since January 16.
Trading volumes stood at 39,883 lots of 25 tonnes each on Wednesday evening. "The market is up on a technical retracement and the double-digit fall in production," said a Kuala Lumpur-based trader, referring to production figures from the Malaysia Palm Oil Association on Tuesday, which he said showed a 17 percent drop during January 1-20 compared with the same period last month.
Palm oil output is expected to see seasonal declines in the first quarter of the year before picking up and heading towards peak production in the third quarter. It last fell 5.6 percent to 1.8 million tonnes in December, industry regulator data showed. Another trader said that gains in related oils also lent support to palm, as they compete for a share in the global vegetable oils market.
The March soyabean oil contract on the Chicago Board of Trade rose 0.5 percent, while May soyabean oil on the Dalian Commodity Exchange gained 0.4 percent. In other related edible oils, the Dalian May palm oil contract rose 0.7 percent.
Palm oil may test resistance at 2,519 ringgit per tonne, a break above which could lead to a gain to the next resistance level at 2,555 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.
Comments
Comments are closed.