Palm oil prices rise on the back of supply problems; set to gain weekly
Malaysian palm futures rose for the fifth session in a row on Friday, and are on track to gain a week-long gain amid concerns about supply as heavy rains were exacerbating low production levels.
At midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange gained 121 Ringgit or 2.48% to 5,006 Ringgit ($1,128.24).
This week, the contract has gained 5.23% after two consecutive weeks of falling.
Paramalingam Supramaniam is the director of Selangor brokerage firm Pelindung Bestari. He said that the incessant rainfall, particularly in the east coast, and the northern parts, will exacerbate the already low production levels.
Many other states are also on alert for the possibility of further flooding. "The overall sentiment remains fragile, and supply constraints are likely to keep prices on the defensive," he added.
According to the Malaysian Palm Oil Board's (MPOB) data released earlier this month, palm oil stocks dropped by 6.32% to 1,88 million tonnes in October, while crude production of palm oil fell by 1.35% to 1,80 million tons.
Dalian's palm oil contract grew by 2.75%, while the most active soyoil contract climbed by 2.06%. Chicago Board of Trade closed on Thanksgiving Day.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
On Saturday, cargo surveyors will release their estimates of Malaysian palm oil imports for the period Nov. 1-30.
The oil prices fluctuated following a possible renewal of the supply risk, as Israel and Hezbollah exchanged accusations of ceasefire violation. Investors were also waiting for a decision from an OPEC+ gathering after a postponement.
Brent crude futures rose 0.14% to $73.38 per barrel as of 0445 GMT.
The palm ringgit's trade currency strengthened by 0.16% against dollars, increasing the price of the commodity for holders of foreign currencies.
Technical analyst Wang Tao stated that palm oil could test resistance at 4,917 Ringgit per ton. A break above this level would open the door for 4,985 Ringgit.
(source: Reuters)
