Palm posts weekly gains despite production concerns
Malaysian palm futures posted a sharp gain on Friday, with a weekly gain of 1.6%. This was due to fears that production would be cut in key palm oil producing areas.
The benchmark contract for palm oil delivery in May on the Bursa Derivatives Market gained 147 ringgit or 3.28% to close at $4,627 ringgit (1,048.73 USD) per metric ton.
Anilkumar bagani, the research head at Mumbai-based Sunvin Group, said that futures prices were trading higher amid fears of a cut in production at key palm oil regions in Malaysia. He also noted bargain-buying and heavy short-covering.
A minister revealed that palm oil plantations have been infested in two states of Malaysia. The country is recovering from flooding which has also affected production.
A survey found that the floods in February caused Malaysia's palm oil inventories to fall to their lowest level in almost three years.
GAPKI (the Indonesia Palm Oil Association) released data on Thursday showing that Indonesia exported 29.5 millions metric tons of palm products in the last year. This represents an 8.3% decrease on the previous year.
A Mumbai-based dealer said that India purchased a good amount of palm oil in the past week after making lower than normal purchases between January and February. This had led to a sharp reduction in stock levels.
In February, India's imports of palm oil rose 36% month-on-month after dropping to their lowest level since March 2011.
Dalian's soyoil contract, which is the most active one, gained 1.48% on Thursday after data showed that U.S. exports of soyoil in January reached a record high for 15 years. Palm oil contracts in Dalian gained 2.89% while soyoil prices on the Chicago Board of Trade fell 0.35%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils.
The price of palm oil has increased by 0.38% since the beginning of the year. ($1 = 4.4112 ringgit). (Reporting and editing by Sumana Nady and Eileen Soreng.
(source: Reuters)
