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Palm rose to highest closing since April 18
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MPOA says April output fell 8.3% m/m -traders
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Crude futures, Dalian edible oils rose
(Updates with closing prices, adds details)
By Mei Mei Chu
KUALA LUMPUR, May 8 (Reuters) - Malaysian palm oil
futures surged more than 4% on Monday to its highest closing in
nearly three weeks, as forecasts of a sharper decline in April
output triggered production concerns.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed up 157 ringgit, or 4.36%, to 3,758 ringgit ($847.35) a tonne.
Palm extended gains to a fourth consecutive session, marking its highest closing since April 18. The Malaysian Palm Oil Association (MPOA) forecast an 8.3% month-on-month decline in April production, traders said, sparking concerns of a steeper than expected production cut.
By comparison, a
Reuters survey last week pegged April production to tick up 0.9%. April inventories were forecast to drop to their lowest level in 11 months as domestic use rises amid flat production. Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group said this has sparked fears that production is really bad in Malaysia and the market is speculating about a similar situation for Indonesia.
The Malaysian Palm Oil Board is scheduled to release its
April supply and demand data on Wednesday.
Also exacerbating production fears is a looming El Nino
weather pattern that the World Meteorological Organization
forecast will likely happen between May-September. Dry weather
as a result of El Nino in main producers Indonesia and Malaysia
will cut yields of the edible oil.
In related oils, Dalian's most-active soyoil contract gained 1.7%, while its palm oil contract rose
3.1%. Soyoil prices on the Chicago Board of Trade were
up 0.8%.
Palm oil is affected by price movements in related oils as
they compete for a share in the global vegetable oil market.
Oil rose as U.S. recession fears eased and some traders took
the view that crude's recent price slide was overdone. Stronger crude oil futures make palm a more attractive
option for biodiesel feedstock.
($1 = 4.4350 ringgit)
(Reporting by Mei Mei Chu; Editing by Sohini Goswami, Eileen
Soreng and Louise Heavens)
* To view freight rates from Peninsula Malaysia/Sumatra to China, India, Pakistan and Rotterdam, please key in and press enter, or double click between the brackets.
* Reuters Terminal users can see cash and futures edible oil prices by double clicking on the codes in the brackets: To go to the next page in the same chain, hit F12. To go back, hit F11. Vegetable oils Malaysian palm oil exports CBOT soyoil futures CBOT soybean futures Indian solvent Dalian Commodity Exchange Dalian soyoil futures Dalian refined palm oil futures Zhengzhou rapeseed oil European edible oil prices/trades ))
