By Mei Mei Chu
KUALA LUMPUR, Oct 5 (Reuters) – Malaysian palm oil futures jumped to a record high above 4,700 ringgit a tonne on Tuesday, buoyed by external factors including higher crude oil prices and as market surveys pointed to tightening September stockpiles amid lacklustre production.
The benchmark palm oil contract FCPOc3 for December delivery on the Bursa Malaysia Derivatives Exchange gained 131 ringgit, or 2.86%, to 4,714 ringgit ($1,127.75) a tonne by the midday break, rising for a second straight session.
Palm has gained close to 31% so far this year. Last Thursday, it had hit its previous record high on strong exports.
Sathia Varqa, Palm Oil Analytics co-founder, attributed the jump to external factors but said buying will be limited as big buyers from China are on a week-long holiday.
Palm jumped “mainly on support from a surge in Brent crude oil prices, which hit a fresh three-year high, and on report of shortage of canola causing importers to turn to other oils boosting prospect of palm oil exports,” he said.
Brent crude LCOc1 extended gains after the world’s major oil producers said they had decided to keep a cap on supplies.
Stronger crude futures make palm a more attractive option for biodiesel feedstock.
Malaysia’s palm oil inventories at the end of September are expected to ease slightly from a 14-month peak hit in the previous month, as skyrocketing exports offset a small rise in production, according to a Reuters poll.
Palm oil stockpiles in the world’s second-largest producer likely fell 0.36% to 1.87 million tonnes, while production was seen rising 2.8% to 1.75 million tonnes.
The Malaysian Palm Oil Board will release official data on Oct. 11.
Soyoil prices on the Chicago Board of Trade BOc2 were up 0.24%. The Dalian commodity exchange is closed until Thursday for a public holiday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
($1 = 4.1800 ringgit)
(Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)
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