By Mei Mei Chu
KUALA LUMPUR, Jan 4 (Reuters) – Malaysian palm oil futures rose for a third straight session on Tuesday, hovering near their highest in more than three weeks, as worsening floods stoked worries about a slump in production.
The benchmark palm oil contract FCPOc3 for March delivery on the Bursa Malaysia Derivatives Exchange gained 9 ringgit, or 0.19%, to 4,866 ringgit ($1,164.39) a tonne by the midday break.
The contract jumped 3.4% on Monday after seven states in Malaysia were hit by floods and thousands of people were evacuated, leading to disruption in harvesting activities.
The market is expecting a huge loss in production as the collection of palm fruit bunches has been severely hit, potentially reducing January output and December-end inventories, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Supplies remained tight due to wet weather brought by the Northeast monsoon season, with industry data estimating December output 8.5% lower than a month earlier, according to Refinitiv Commodities Research.
Persistently high palm oil prices and fresh lockdowns to combat the Omicron coronavirus variant have hurt demand, Refinitiv said on Monday.
Palm exports from Malaysia, the world’s second-largest producer, fell 5.3% month-on-month in December, cargo surveyor Intertek Testing Services said on Friday.
Dalian’s most-active soyoil contract DBYcv1 gained 1.7%, while its palm oil contract DCPcv1 rose 3%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.4%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may retest a resistance at 4,873 ringgit per tonne, a break above which could lead to a gain to 4,948 ringgit, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.1790 ringgit)
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(Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)
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