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February 19, 2002
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Tuesday
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Zilhaj 6, 1422
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Malaysian palm oil rallies
KUALA LUMPUR, Feb 18: Malaysian palm oil futures rallied across the board on Monday, aided by strong covering in the physical sector due to worries that dry weather could hit output in the next few months.
Bush and forest fires, made worse by a dry spell in recent weeks, have broken out across Malaysia. There were no reports the fires had affected palm oil plantations.
The Malaysian Meteorological Service said on Monday the fires could spread further.
The present hot and dry conditions predominating over the west coast states of the peninsula are conducive for the occurrence and rapid spread of fires, the agency said.
The fires came on top of forecasts that an El Nino weather pattern is developing in the Pacific.
El Nino’s effects can include drought and forest fires in Southeast Asia and eastern Australia, and heavy rain and floods in the Americas.
Some traders said palm oil production could fall in the next few months if the dry weather persisted. Private forecaster Ivan Wong has put March output at 870,000-875,000 tons, up from 770,000-775,000 tons.
At the close, the new benchmark third-month May futures contract was 35 ringgit higher at $305.79 a ton after breaking key resistance of 1,150. Volume was heavy at 2,717 lots.
Traders said the market was desperate to find out when China was going to issue licences to local importers after it released this year’s palm oil imports quotas.
China’s State Development Planning Commission said on February 8, it would allow imports of 2.4m tons of palm oil in 2002. This year’s quota is one million tons higher than in 2001 following China’s entry to the World Trade Organization.
In physical palm oil, the February contract for the southern and central regions saw bids at 1,125 ringgit a ton versus offers at 1,135. Trade was done at 1,120 to 1,125 ringgit for south and at 1,120 to 1,135 for central.
The March contract for south and central saw bids at 1,145 ringgit against offers at 1,150. Business was reported at 1,140 for both sides.—Reuters
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