You are here

Palm oil jumps 1% on expectations of tightening supplies

WH_palmoil_021199.jpg
Malaysian palm oil futures jumped on Monday, boosted by expectations of tightening supplies and strong demand led by biodiesel consumption.

[SINGAPORE] Malaysian palm oil futures jumped on Monday, boosted by expectations of tightening supplies and strong demand led by biodiesel consumption.

The benchmark January palm oil contract on the Bursa Malaysia Derivatives Exchange gained 1.1 per cent, or RM26, to RM2,487 (S$812.55) per tonne by the midday break.

"The supply scenario is pretty bullish for prices next year," said one Kuala Lumpur-based trader. "We have the biodiesel story which could lead to higher supplies being diverted to make biodiesel."

Top palm oil industry analysts on Friday revised up their price outlook for the edible oil, pointing to reduced production and optimism that Indonesia's so-called B30 biodiesel programme will help bolster demand.

Dorab Mistry at an industry conference in Nusa Dua said that Malaysian palm oil output in 2020 was expected to be lower than 2019, due to dry weather and fertiliser cuts.

Thomas Mielke, editor of World Oil, expects world palm oil stocks to fall by two to three million tonnes in the next 12 months, from September's 14.7 million tonnes.

Meanwhile, haze due to forest fires in top palm oil producer Indonesia has likely affected the quality of palm fruits and production of the vegetable oil this year, a leading industry analyst James Fry said on Thursday.

In related edible oil markets, Dalian palm oil prices gained 0.3 per cent, while soya oil rose 0.7 per cent.

On the technical front, palm oil may fall into a range of RM2,364-2,422 per tonne, as it has pierced below a support at RM2,461, according to Wang Tao, a Reuters market analyst for commodities technicals.

REUTERS

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes