Palm oil set for fifth weekly gain on output concerns

Malaysian palm oil futures rose on Friday and were on track for a fifth consecutive weekly gain, in what would be their longest winning run in three years, as expectations of weaker production supported the market.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained 58 ringgit, or 1.25%, to 4,700 ringgit ($1,063.83) a metric ton by the midday break.

The contract has risen 2.47% so far this week.

The market is trading higher due to expectations of a weaker output in Malaysia, which may lower overall stock levels in the country, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Dalian’s most-active soyoil contract rose 0.05%, while its palm oil contract added 1.44%. Soyoil prices on the Chicago Board of Trade were down 0.5%.

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

Oil prices extended gains, headed for a weekly increase, as falling inventories of US gasoline and distillate raised expectations of solid demand while concerns over supply disruptions in Russia lent support.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. Cargo surveyors estimated that exports of Malaysian palm oil products during February 1-20 fell between 0.3% and 8.1%, compared with the same period a month earlier.

Indian refiners have cancelled orders for 70,000 metric tons of crude palm oil scheduled for delivery between March and June because of a surge in benchmark Malaysian prices and negative refining margins in India, four trade sources said.

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