Palm Oil Hits 9 Weeks high, due to rally in rival oils, and weaker Ringgit

KUALA LUMPUR:Malaysian palm oil futures ticked up on Friday to log a 9.4% weekly jump, as a recent rally in rival edible oils, crude futures, and a declining ringgit lent support.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange gained 28 ringgit, or 0.7%, to 4,365 ringgit ($919.72) a tonne, rising for a fourth session in five.

It had earlier jumped 3%, but surrendered gains after leading analysts told a conference global demand for the commodity remains uncertain as strict COVID-19 policies in key market China remains.

Palm oil prices are expected to trade between 3,500 to 4,500 ringgit per tonne in the period from now until the end of March next year due to higher crude prices and weaker ringgit, said Dorab Mistry, director of Indian consumer goods company Godrej International.

Malaysia’s palm oil rally inventories at end-October likely swelled to 2.53 million tonnes, its highest in three and a half years, as production improved while imports slumped, a Reuters survey Production is seen expanding 3% to 1.82 million tonnes, while exports likely rose 4.5% to 1.48 million tonnes, the survey showed.

In top producer Indonesia, the Indonesia Palm Oil Association (GAPKI) said palm oil and kernel oil production is expected to slip to 51.3 million tonnes this year, from 51.6 million tonnes in 2021.

Leading industry analyst Thomas Mielke said global palm oil output is seen increasing by 2.9 million tonnes in the 2022/23 season.

In related oils, Dalian’s most-active soyoil contract rose 1.2%, while its palm oil contract gained 0.7%. Soyoil prices on the Chicago Board of Trade were up 1.2%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Oil climbed as the dollar eased and supply risks lingered, though recession fears and China’s COVID outbreaks kept a check on prices.