Malaysian palm oil futures ended higher for a third consecutive session on Friday, snapping a three-week decline. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained 26 ringgit, or 0.67%, to close at 3,916 ringgit ($830.54) per metric ton.
For the week, the contract rose 0.4%, marking its first weekly gain in four weeks.
Market participants are concerned about output in Malaysia, the world’s second-largest producer, after industry forecasts pegged production to decline in June. Additional support came from the bullish energy prices and reports of top producer Indonesia targeting to implement its B40 palm oil biodiesel programme by 2025, according to Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Meanwhile, India’s annual monsoon has covered more than three-fourths of the country and is set to cover the entire country on time for the planting season, despite stalling earlier this month. Good rainfall in India, the world’s largest edible oil importer, can boost production of summer-sown oilseeds such as soybeans and groundnut, limiting the requirement for palm oil imports in the new marketing year starting from November 1.
Dalian’s most-active soyoil and palm oil contracts both gained, while soyoil prices on the Chicago Board of Trade also rose. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices also rose and were on course for a third straight weekly jump, buoyed by growing expectations that the U.S. Federal Reserve will soon start cutting interest rates and anticipation of U.S. inflation data. Higher crude oil futures make palm a more attractive option for biodiesel feedstock.