(Adds closing prices, weather warning, quote)
* Prices jump to 2,483 rgt in late trade
* Weather concerns trigger rally in market - trader
* Currency rises as much as 1.1 percent on Monday
* B7 blend could raise Malaysia's biodiesel consumption to 700,000 T
By Anuradha Raghu
KUALA LUMPUR, Oct 28 (Reuters) - Malaysian palm oil futures surged to a near
one-week high on Monday, snapping three straight days of losses as warnings of
wet weather fanned concerns that supply in the world's second-largest producer
could wane earlier than expected.
Malaysia's meteorological department issued a notice on its website late on
Monday, warning of "thunderstorms and heavy rain" over most of Malaysia,
including the major palm oil producing states of Sabah, Johor and Pahang.
"They're worried about the wet weather which will bring down production,"
said a trader with a foreign commodities brokerage. "Although the ringgit is
strong, the weather is the one that's affecting the market."
The monsoon season, which typically rolls in from November, may cause floods
that disrupt harvesting and complicates the transportation of fresh fruit
bunches to mills.
"This is a supply-driven rally," said another trader with a local
commodities brokerage. "We're heading towards the months of November, December
and January which produce thinner supply because of the monsoon and seasonal
cycles," the trader added.
The benchmark January contract on the Bursa Malaysia Derivatives
Exchange surged as high to 2,483 ringgit in late Monday trade, reversing losses
from the morning session. Prices by the day's close settled at 2,460 ringgit
($786), a 0.8 percent gain.
Total traded volume stood at 36,495 lots of 25 tonnes each, marginally
higher than the usual 35,000 lots.
The Malaysian ringgit raced to its highest in more than four months
on Monday to trade at 3.1220 per dollar as the government steps in to tackle a
worrying fiscal deficit attracted capital inflows.
A stronger ringgit makes palm feedstock expensive for overseas buyers and
Malaysia's plans to raise its biodiesel requirement to 7 percent palm oil,
up from 5 percent, will see tighter stockpiles from next year if the policy is
successfully implemented nationwide.
Reuters reported that the "B7" biodiesel blend could be mandatory from
December as talks with interested parties were nearing a conclusion.
"We estimate that when B7 is fully implemented, it could raise the country's
consumption of crude palm oil for biodiesel usage to 700,000 tonnes per annum,"
said CIMB analyst Ivy Ng in a note on Monday.
"This would represent an increase of 550,000 tonnes from Malaysia's current
biodiesel consumption of 150,000 tonnes, and will be positive for crude palm oil
prices from H2 2014 onwards," she added.
In other markets, Brent crude rose towards $108 a barrel on Monday, after
three days of losses, amid expectations the U.S. Federal Reserve would maintain
its economic stimulus at its policy meeting this week.
In competing vegetable oil markets, the U.S. soyoil contract for December
rose 0.9 percent in late Asian trade. The most-active May soybean oil
contract on the Dalian Commodities Exchange dropped 0.6 percent.
Palm, soy and crude oil prices at 1024 GMT
Contract Month Last Change Low High Volume
MY PALM OIL NOV3 2470 +22.00 2453 2502 741
MY PALM OIL DEC3 2470 +26.00 2428 2489 3143
MY PALM OIL JAN4 2460 +19.00 2426 2483 20627
CHINA PALM OLEIN MAY4 6084 -14.00 6062 6122 494162
CHINA SOYOIL MAY4 7130 -40.00 7108 7144 449000
CBOT SOY OIL DEC3 41.06 +0.33 40.73 41.21 7751
NYMEX CRUDE DEC3 97.92 +0.07 97.50 98.05 13130
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1=3.13 Malaysian ringgit)
(Editing by Prateek Chatterjee)
- Commodity Markets
- USA News
- Malaysian ringgit