The Star Online (06/03/2020) - KUALA LUMPUR: Palm oil futures surged for a fourth day on expectations that purchases will pick up to meet festive-season demand and production will rise slower than earlier predicted.
Prices climbed as much as 2.9%, after jumping the most in a month on Wednesday on short covering.
The market has been volatile in past weeks on concerns about demand following the rapid spread of the coronavirus, weaker exports, choppy petroleum and a trade spat between India and Malaysia.
The market is supported by expectations of a lower increase in production last month than previously predicted and strong buying ahead of Ramadan, said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based broker and consultant.
“Palm oil also had a lucrative discount over soft oils at Indian ports at the start of this week, attracting importers before some key festivals in the world’s biggest buyer of the tropical commodity.” India will celebrate Holi, the festival of colours, next week.
Edible oil demand generally surges around the festival as fried food consumption rises.
The palm oil market was also helped by a rise in rival soybean oil and firmer petroleum prices, which raised the tropical oil’s attractiveness as a biofuel. Still, gains are likely to be capped as a survey showed exports from Malaysia likely slipped to their least since 2018 last month as the coronavirus outbreak in China cut demand at the second-biggest buyer.
Last week, palm oil futures posted their steepest weekly drop since the global financial crisis and are still down about 18% from their January peak.
Palm oil for May rises as much as +2.9% to RM2,566 a tonne, before trading at RM2,562 by midday break, up 10.5% so far this week-11.6% last week, worst weekly drop since October 2008. — Bloomberg
Read more at https://www.thestar.com.my/business/business-news/2020/03/06/palm-oil-futures-extend-gains-on-festival-demand-optimism#cxrecs_s