KUALA LUMPUR: Malaysian palm oil futures extended gains into a sixth session on Thursday and hovered near a five-month high hit in the evening on expectations that production growth will be slower than previously forecast.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was up 1.4 percent at 2,777 ringgit ($649.14) by the close, registering its strongest daily gain in more than two weeks.
Palm rose to an intraday high of 2,782 ringgit on Thursday, its highest since March 23.
Traded volumes stood at 50,096 lots of 25 tonnes each on Thursday evening.
“We are seeing small increases in production, which many did not anticipate. That is one reason why the market is holding up,” one Kuala Lumpur trader said, referring to output so far this month. “Whether end-stocks (in August) will rise significantly again is another question.”
Palm oil stockpiles at the end of July rose by a forecast-beating 16.8 percent to 1.78 million tonnes, the highest in more than a year, according to industry regulator data.
Production in July rose 20.7 percent from a month earlier to 1.83 million tonnes, also surpassing expectations.
However, gains in August inventory and production may not match those of July, according to traders who had earlier expected to see double-digit growth.
Another trader added that the market was also up on technical buying and short-covering but could face strong resistance at price levels of 2,800 ringgit.
Palm oil may retest resistance at 2,768 ringgit a tonne as it could have resumed its uptrend, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In related vegetable oils, the October soybean oil contract on the Chicago Board of Trade was up 0.4 percent, while the January soybean oil contract on the Dalian Commodity Exchange rose 0.2 percent.
The January palm olein contract on the Dalian exchange climbed as much as 0.6 percent.
Palm oil prices are affected by movements in other edible oils that compete for a share in the global vegetable oils market. – Reuetrs
Source : The Star