May, 08(Agencies) — Malaysian palm oil futures extended gains to a fourth consecutive session on Monday, hitting a more than two-week high, as forecasts of a sharper decline in April output triggered supply concerns.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 66 ringgit, or 1.83%, to 3,667 ringgit ($826.83) a tonne during early trade, hitting its highest since April 20.
Malaysia’s palm oil inventories at the end of April are forecast to drop to their lowest level in 11 months as domestic use rises amid flat production, a Reuters survey showed on Friday.
April production is seen expanding 0.9% from the month before to a three-month high of 1.3 million tonnes, according to the survey.
However, traders are concerned that production will fall even more than expected after a research house estimated a steeper decline of 6%-10%, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
This has sparked fears that production is really bad in Malaysia and the market is chattering about similar phenomena for Indonesia as well, Bagani said.
Top producer Indonesia will narrow the scope of crude palm oil products traded on a planned exchange it hopes to launch by June, a regulator said last week.
Dalian’s most-active soyoil contract gained 1.2%, while its palm oil contract rose 2.6%. Soyoil prices on the Chicago Board of Trade were down 0.2%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oil market.
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