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Malaysian palm oil price sees strongest gains in 2 weeks

Malaysian palm oil price sees strongest gains in 2 weeks

KUALA LUMPUR: Malaysian palm oil futures made their biggest daily gains in two weeks on Tuesday, reversing losses from the previous session, supported by strength in related edible oils. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was up 2 percent to 2,626 ringgit ($612.98) at the close of trade, its strongest daily gain since July 25.

Palm hit a two-week low in the previous session, touching an intraday low of 2,572 ringgit. Traded volumes stood at 41,473 lots of 25 tonnes each on Tuesday evening.”Palm oil is tracking gains in U.S. and Dalian soyoil, and there is some short-covering on a previously oversold market,” said a trader in Kuala Lumpur, referring to gains in soyoil on the Chicago Board of Trade and China’s Dalian Commodities Exchange. “Production is seen picking up and rising stocks are expected in the next few months … But the supply and demand scenario is already factored into the market.” A Reuters poll of nine traders, planters and analysts forecast that Malaysian output in July will rise 11 percent to 1.68 million tonnes, leading to 6.5 percent gain in inventory levels to 1.63 million  tonnes. Exports are seen up 4 percent to 1.43 million tonnes.

Official data from the industry regulator, the Malaysian Palm Oil Board (MPOB), is scheduled for release on Thursday. Palm oil production shows seasonal gains in the second half of the year, but uncertainty remains over the extent of palm’s gains as trees are still seeing the lingering effects of a crop damaging El Nino. The October soybean oil contract on the Chicago Board of Trade rose 0.9 percent, while the January soybean oil on the Dalian Commodity Exchange gained 1.4 percent. In related oils, the January palm olein contract was up 0.6 percent.