Palm oil gains for third day, headed for weekly rise

Malaysian palm oil futures extended gains to a third session on Friday, setting it to snap a three-week decline on concerns over poor production and tracking higher rival edible oils.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange gained 35 ringgit, or 0.9%, to 3,925 ringgit ($831.74) a metric ton by the midday break.

For the week, it is headed for a 0.64% rise.

Market participants are concerned about output in Malaysia, the world’s second largest producer, after industry forecasts pegged production to decline in June.

India’s annual monsoon has covered more than three-fourths of the country and it is set to cover the entire country on time for the planting season despite stalling earlier this month, two senior weather officials said on Thursday.

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 Nov. 1.

Dalian’s most-active soyoil contract DBYcv1 rose 0.6%, while its palm oil contract DCPcv1 gained 1%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.05%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Oil prices rose and were poised for a third straight weekly jump, buoyed by growing expectations that the U.S. central bank will soon start to cut interest rates.

Higher crude oil futures make palm a more attractive option for biodiesel feedstock.

Tags: Malaysia, palm oil, futures, benchmark contract, edible oils