Malaysian palm oil futures hit a two-month high on Friday, achieving a fourth session of gains in five, due to tight physical supplies of the tropical oil. Benchmark palm oil futures for October on the Bursa Malaysia Derivatives Exchange rose 1.7 percent to 2,525 ringgit ($627) per tonne in the evening. The price earlier rose to an intraday high of 2,551 ringgit, its highest levels since June 13.
Palm reached a weekly gain of 4.9 percent, its strongest weekly climb since February.
Traded volumes stood at 73,297 lots of 25 tonnes each at the closing trade, higher than last year's average of 44,600.
"The market is fulfilling the upside trend. Supplies are tight as production isn't coming in," explained a Kuala Lumpur-based trader, attributing the short supplies to lower output due to the El Nino's dry weather effects.
The weather phenomenon, which occurred last year, typically brings scorching heat across Southeast Asia, impacting palm oil yields in the world's largest producers of the tropical oil -
Malaysia and Indonesia - this year. July-end production in Malaysia, the world's second-largest palm oil producer, showed a 3.5 percent month-on-month to 1.59 million tonnes, according to government data from the Malaysian Palm Oil Board (MPOB). Output however was at its weakest July levels in six years due to the effects on fruit yields of El Nino.
In related vegetable oils, the Chicago Board of Trade soyabean oil December contract gained 0.6 percent.