VEGOILS - Palm oil has the highest weekly gain since June 2022, with a gain of more than 4%.

Malaysian palm futures rose for the third week in a row on Friday, as an industry conference held in Bali released projections for production and palm oil prices for 2024-2025.

This week the contract increased by 4.77%, which is the highest gain since June 20, 2022.

On the closing, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for January delivery gained 148 Ringgit or 2.99% to $5100 ringgit (1164.38 USD) per metric ton.

The futures opened with a gap and met resistance above 5,000 Ringgit. It remained supported at this level due to the broader vegetable oil rally, indicating a strong bullish mood, said Darren Lim of Singapore-based Phillip Nova.

Analysts said that the Malaysian benchmark palm futures have seen a more than 35% increase this year. They expect it to continue to rise above and around 5,000 Ringgit ($1,141), per metric ton, until June 2025. This is due to tight supply and a bullish demand.

A senior official of the Indonesia Palm Oil Association said that Indonesia's plan for increasing the mandatory palm oil percentage in biodiesel from 35% to 40% by next year will require an extra feedstock supply of approximately 3 million metric tonnes.

Thomas Mielke, an industry analyst, said that the global palm oil production is expected to increase by 2.3 millions tons between October 2024 and September 2025, after having dropped by 1.2 million tonnes in the season 2023-2024.

Dalian's palm oil contract, which is the most active contract, gained 2.466%. Chicago Board of Trade soyoil prices rose 0.7%.

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

Palm oil is now more expensive to buyers who hold foreign currencies due to the ringgit's 0.45% increase against the U.S. Dollar.

Oil prices dropped slightly, as the likelihood of a hurricane in Gulf of Mexico affecting U.S. gas and oil production declined. The market also weighed the impact of President-elect Donald Trump’s policies on supply.

Palm oil is less appealing as a biodiesel source due to weaker crude oil futures. $1 = 4.3800 Ringgit (Reporting and editing by Subhranshu Sahu; Sumana Nandy, Vijay Kishore and Subhranshu Sahu)

(source: Reuters)