Palm oil hits new 15-month high

Malaysian palm oil futures surged for a sixth day in a row to new 15-month highs on Tuesday, bolstered by bullish analyst forecasts, a weakening ringgit and expectations recent dry weather and haze will curb crop output. By Tuesday’s close, the benchmark December palm oil contract on the Bursa Malaysia Derivatives (BMD) exchange was up 2.38 percent at 2,450 ringgit ($549.82) a tonne, after dipping to as low as 2,352 ringitt during the morning session.

The benchmark touched 2,460 ringgit in the afternoon session, it’s highest since June 2014. Traded volume stood at 72,597 lots of 25 tonnes each, roughly double the average 35,000 lots usually traded daily. “In the afternoon the spike came because of the news coming out of India,” said a trader at a foreign commodities brokerage in Kuala Lumpur, referring to statements by leading analyst James Fry at an industry conference in Mumbai.

“When someone like James Fry who has been very bearish on crude oil has suddenly turned bullish, people holding positions take note.” Crude palm oil (CPO) prices are likely to surge 40 percent to $700 per tonne by mid-2016 as an El Nino weather event dents output and as top producer Indonesia uses more palm-based biodiesel, Fry said. World palm oil output growth will be halved next year due to the El Nino weather pattern, leading vegetable oil analyst Thomas Mielke said late on Monday. Meanwhile, palm oil imports by India, the world’s top importer of edible oils, are also expected to climb to record levels in 2016, also as a result of dry weather, which is seen restricting supplies, a veteran trader said on Monday. In competing vegetable oil markets, the US December soyoil contract was down 0.66 percent in late Asian trading, while the most active January soybean oil contract on the Dalian Commodity Exchange fell 1.36 percent.



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