Palm extends gains on hot weather, ahead of Eid holiday

Malaysian palm oil futures rose for the third straight session on Wednesday, due to a shortage after a slowdown in production during Ramadan, topped with hot weather over the past weeks.

The benchmark palm oil contract FCPO1! for June delivery on the Bursa Malaysia Derivatives Exchange rose 84 ringgit, or 1.95%, to 4,396 ringgit ($926) a metric ton, by the midday break.

"The futures is strong due to the coming Eid holiday. The Ramadan month provides a slowdown in production plus hot weather over the past weeks has resulted in lower yield, so there is a shortage of palm oils in the market at the moment," a Kuala Lumpur-based trader told Reuters.

The soyoil contract (DBYcv1) on the Dalian Commodity Exchange gained 0.79%, while its palm oil contract CPO1! was up 2.48%. Soyoil prices on the Chicago Board of Trade (BOc2) were up 0.31%.

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

India's palm oil imports hit a ten-month low in March to 481,000 tons, as the top vegetable oil buyer increased sunflower oil imports amid lower prices, traders said.

Exports of Malaysian palm oil products for March were seen rising between 11.77% and 29.2%, cargo surveyors Intertek Testing Services, AmSpec Agri Malaysia and Societe Generale de Surveillance (SGS) said.

Oil prices extended gains on Wednesday as a larger-than-expected fall in U.S. crude inventories and escalating geopolitical tensions raised investor worries about tighter supplies.

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

Palm oil FCPO1! may extend gains into a range of 4,432 ringgit to 4,462 ringgit per metric ton, as suggested by a projection analysis, according to Reuters' technical analyst Wang Tao.