Palm oil falls as weather improves in Malaysia; gains for a second week

Malaysian palm oil futures declined on Friday on easing supply concerns, as weather improved in the world’s second-largest producer Malaysia; however, the contract rose fora second week.

The benchmark palm oil contract FCPOc3 for February delivery on the Bursa Malaysia Derivatives Exchange lost 3 ringgit, or 0.06%,to 5,132 ringgit ($1,161.87) a metric ton at closing.

The contract rose 2.29% for the week.

“The rains have stopped at least for now, thus the damage is not widespread,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

A devastating flood hit Malaysia last week following heavy rain in late November and the country’s meteorological department earlier this week forecast monsoon surge from Dec. 8 to 14, which could bring continuous rain to the east coast of Malaysia’s peninsular and parts of Sabah and Sarawak states on Borneo island.

The contract is also easing as demand – especially for January – is seen as minimal, he added, while market participants are waiting for more direction from Malaysian Palm Oil Board data on November performance.

Dalian’s most-active soyoil contract DBYcv1 was up 0.36%,while its palm oil contract DCPcv1 fell 0.41%. Soyoil rose 1.25% at the Chicago Board of Trade.

Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Malaysia’s palm oil inventories are expected to have fallen in November for a second consecutive month as torrential rains disrupted production.

Tags: futures, benchmark contract, soyoil, Malaysia, palm oil