FCPO related news

Crude palm oil futures on Malaysia’s derivatives exchange ended higher Friday, underpinned by gains in Chicago soyoil futures and firm demand for palm oil. The benchmark November contract at Bursa Malaysia Derivatives ended 0.3% higher at 3,069 ringgit a metric ton after moving in a MYR3,066-MYR3,097 range. (Palm Oil HQ)

Palm oil prices have risen 4.3% since the beginning of August and hit a five-week high of MYR3,100/ton Thursday as declining outlooks for rival soybean crops in the U.S. and South America point to tighter global vegoil supplies.

The tropical oil could move higher in the coming weeks, as poor soybean harvests will limit soy’s export availability and drive edible oil buyers to turn to alternative vegoils, a vegoil analyst in Jakarta said.

Adding to palm oil’s supportive factors were growing concerns about a developing El Nino weather event that is usually associated with warmer temperatures and scant rainfall in Southeast Asia. Drought-like weather in major palm oil producers Indonesia and Malaysia, which together account for 90% of global production, could damage crops and hurt yields, tightening global vegoil supplies.

"Investors anticipate export demand [for palm oil] to rise further since the oil is now trading at a discount of $240/ton to rival soyoil" compared with a historical average [discount] of $100/ton, a trading executive in Singapore said.

Trading executives are looking to Aug. 1-25 export estimates by cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. in the next few days for demand cues.

Generally, the market has further room to move higher as it is still trading in a tight range of 3,050-3,100 ringgit.