Palm prices surge for a fourth day due to lower stocks and possible production drops

Malaysian palm oils jumped by more than 2% in value on Thursday. This was due to expectations that palm production would decline and the national stockpiles would be reduced.

The benchmark contract for palm oil delivery in January on the Bursa Derivatives Market gained 116 Ringgit or 2.59% to 4,602 Ringgit per metric ton.

The contract gained 7.92% in total over four sessions.

David Ng is a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn Bhd. He said that the prices of crude palm oil opened higher on expectations of a weaker production and lower stock levels.

The Malaysian Palm Oil Board announced this month that palm oil production fell 3.8% from August to September, but palm oil exports increased 0.93%.

Dalian's palm oil contract grew by 1.55%, while the most active soyoil contract increased by 0.71%. Chicago Board of Trade soyoil prices rose 2.21%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the prices of competing edible oils.

The price of crude oil rose by more than 1% on Tuesday, reversing the losses of the previous session, as traders were on edge due to the Middle East conflict, and reports that North Korean troops are ready to assist Russia in Ukraine.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The palm ringgit's currency has strengthened by 0.05% compared to the U.S. Dollar, increasing the price of the commodity for buyers who hold foreign currencies.

On Friday, cargo surveyors will release estimates of Malaysian palm oil imports for the period Oct. 1-25. Ashley Tang (Reporting; Editing: Janane Venkatraman, Sumana Nandy, Alison Williams and Alison Williams).

(source: Reuters)