June 20, 2023 (MLN): Malaysian palm oil continues its upward trajectory for six consecutive sessions amid concerns over hot and dry weather.
The benchmark palm oil contract rose by 0.45% to 3,774 ringgit a tonne.
Palm oil prices have surged by 17.89% this month, narrowing the year-to-date decline to 9.6%.
Malaysia is the largest producer of palm oil and is experiencing water stress from early signs of EL Nino weather patterns.
Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand & Co. stated that the market seems to be steady with expectations of some yield losses in Malaysia due to hot and dry weather, as Reuters reported.
But Indonesia has been putting pressure on the market by selling cheaper palm olein as production has increased, and it is now looking to capture more market share, he added.
Signs of worsening drought in the U.S. Midwest have also heightened soybean crop concerns, pushing Chicago soybean futures to hit their highest in nearly six weeks on Friday.
Moreover, the oil market started the week on a low note, as concerns about China’s economic growth eclipsed OPEC+ production reductions and the seventh consecutive fall in the US oil and gas rig count.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Palm oil is also affected by price movements in related oils as they compete for a share in the global vegetable oils market.
