KUALA LUMPUR: Malaysian palm oil futures posted a second straight weekly gain on Friday, underpinned by stagnant production and strength in rival edible oils.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 45 ringgit, or 1.16%, to 3,940 ringgit ($835.63) at closing.
The contract was up 2.18% for the week, extending 4.7% gain from last week.
Malaysian palm oil futures witnessed a supply-induced rally as production in the world’s second-biggest producer remains precariously low, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“Until we see a recovery in production, prices will continue to rise,” Supramaniam said, adding that good buying interest from key importer China was also helping prices maintain momentum.
Malaysia’s crude palm oil production is seen at 18.75 million tons in 2024, up 1% from last year, as the labour situation improves in the world’s second-biggest producer, a Reuters survey showed on Thursday.
Palm ends at nearly two-month peak on robust China demand
Dalian’s most-active soyoil contract edged up 2.2%, while its palm oil contract gained 2.37%. Soyoil prices on the Chicago Board of Trade were up 0.52%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil rose on Friday, heading for a weekly gain, as Middle East tensions and oil output disruptions caused by cold weather in the U.S., the world’s biggest producer, overshadowed concerns about the health of the Chinese and global economy.
Stronger crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, rose 0.02% against the dollar, making the commodity more expensive for buyers holding foreign currency.