Malaysian palm oil futures were on track to gain for a fourth straight week as they bounced back on Friday, after a steep drop in the previous session, on signs of improving demand as more countries ease coronavirus-induced lockdowns.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange rose 12 ringgit, or 0.52 per cent, to 2,338 ringgit ($548.57) a tonne by the midday break. It was up 2 per cent for the week.
Stronger demand and lower production estimates supported prices today, said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.
Output in May is likely to fall 1 per cent from the previous month, traders said, citing the Malaysian Palm Oil Association (MPOA) estimates.
“MPOA estimates came as a surprise to the market as May production was expected to increase,” a Singapore-based trader said.
The contract had dropped 3 per cent on Thursday on forecasts of climbing stockpile and production, and as investors booked profits after two days of sharp gains.
Malaysian palm oil inventories at the end of May are pegged to rise 9.9 per cent to their highest level in six months, a Reuters survey showed.
Dalian’s most-active soyoil contract gained 0.39 per cent, while its palm oil contract rose 0.49 per cent. Soyoil prices on the Chicago Board of Trade were up 0.58 per cent.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The Malaysian market will be closed for a public holiday on Monday.
Palm oil may test a support at 2,291 ringgit per tonne, with a good chance of breaking below this level and falling towards 2,224 ringgit, Reuters technical analyst Wang Tao said.