KUALA LUMPUR: Malaysian palm oil futures continued on an upward trend on Thursday on strong demand from India and supply concerns in major palm producing countries.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange rose RM57, or 1.41 per cent, to RM4,100 (US$992.74) a metric tonne at the mid-day break.
India's robust demand, driven by domestic consumption and restocking prior to the festive season, is keeping palm oil prices high alongside concerns about the stagnant to declining palm oil production in Malaysia and Indonesia due to current weather conditions, Marcello Cultrera, a grains, oilseeds and softs broker for SSY Global, said.
"As the northeast monsoon season approaches and the production cycle slows, there are growing worries about reaching a production peak in October."
On Wednesday, the Asean specialised meteorological centre reported that wetter conditions is expected for most of the equatorial region between September 30 and October 13.
Indonesia and Malaysia, the world's largest palm oil producers, account for around 85 per cent of the world's exports.
Dalian's most-active soyoil contract rose 1.32 per cent, while its palm oil contract added 1.84 per cent. Soyoil prices on the Chicago Board of Trade fell 0.43 per cent.
"There has been weaker demand for biofuels in certain regions due to falling crude oil prices. As soybean oil is used in biofuel production, a decline in energy prices can reduce demand for soybean oil as a feedstock," Cultrera said.
Palm oil tracks price movements in rival edible oils, as they compete for a share of the global vegetable oils market.
The ringgit, palm's currency of trade, strengthened 0.05 per cent against the U.S. dollar, making the commodity more expensive for buyers holding foreign currencies.
Oil prices were little changed on Thursday after falling in the previous session, as signs of firmer fuel demand and falling inventories in the U.S., the world's top crude oil consumer, outweighed worries over global demand prospects.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Palm oil may test resistance at 4,120 ringgit per ton, a break above which could open the way towards the RM4,153-4,206 range, Reuters technical analyst Wang Tao said.