KUALA LUMPUR: Malaysian palm oil futures rose to a more than three-month high on Thursday, driven by big gains in comparative soy markets as well as optimism that growing food consumption amid weakening palm output will underpin prices into next year.

The benchmark January contract on the Bursa Malaysia Derivatives Exchange had edged up 0.8 per cent to 2,280 ringgit ($693) per tonne by the day’s close. Prices peaked at 2,302 ringgit in intraday trade, their highest since July 21.

Total traded volume stood at 65,212 lots of 25 tonnes, nearly double the usual 35,000 lots.

Technicals looked bullish. Malaysian palm oil is expected to rise to 2,340 ringgit per tonne, as it has cleared resistance at 2,295 ringgit, said Reuters market analyst Wang Tao.

Leading industry analysts are now more bullish on prices of palm, the world’s most traded vegetable oil, due to seasonally weakening output caused by dry spells earlier in Malaysia, as well as the ongoing drought in the palm-growing region of Indonesia’s Kalimantan.

Both Indonesia and Malaysia account for about 85pc of the world’s palm oil supply. Indonesia will set its crude palm oil export tax for November at zero, unchanged from a month ago, a government official said on Thursday.

Top vegetable oil analyst Dorab Mistry told a palm oil conference in Kuala Lumpur on Wednesday that prices will likely trade between 2,100-2,300 ringgit over the next few weeks before rising to around 2,500 ringgit by March, as output drops and stocks ease.

Published in Dawn, October 31st, 2014