March 7, 2014 / 6:08 AM / 4 years ago

VEGOILS-Palm hits 17-month high as dry weather stokes supply fears

* Palm prices hit high at 2,896 ringgit
    * Dry weather worry in world's no.2 palm producer Malaysia

 (Updates closing prices, adds comments)
    By Michael Taylor
    JAKARTA, March 7 (Reuters) - Malaysian palm oil futures rose to a 17-month
peak on Friday, with prices boosted by a combination of gains in comparative
oils and expectations that dry weather may hurt production.
    The benchmark May contract on the Bursa Malaysia Derivatives
Exchange ended 0.7 percent higher at 2,888 ringgit ($890) per tonne. Prices
earlier hit a high of 2,896 ringgit, a level not seen since September 2012.
    "The market is very firm," said a trader with a foreign commodities
brokerage. "Chicago bean oil was up strongly yesterday and then the Dalian was
also up."
    "Also, the weather in Malaysia is still worrisome," he added. "Planters are
worried that if the dry weather persists, the yields from fruit will be less and
supply affected."
    The next three weeks will be crucial for palm oil output, traders and
analysts at a key industry conference in Kuala Lumpur said this week.
 
    Fears of a prolonged dry spell tightening palm supplies have helped prices
gain 8 percent so far this year, although some traders say the recent rally
could be overdone.
    Total traded volume was 35,499 lots of 25 tonnes, slightly above the average
35,000 lots.
    
    "Dry weather and a lot of speculation," said a Jakarta-based palm trader.
"We are going to see slower demand because prices are too high. Buyers are
looking tired."
    In competing vegetable oil markets, the U.S. soyoil contract for May 
added 0.4 percent in late Asian trade, while the most active May soybean oil
contract on the Dalian Commodities Exchange climbed 1.5 percent. 
    In related markets, Brent crude climbed towards $108.50 per barrel, rising
for a second straight session as worsening diplomatic relations between Ukraine
and key oil producer Russia stoked supply fears. 
        
  Palm, soy and crude oil prices at 1016 GMT                                                                                               
                                                                                                                                           
  Contract        Month    Last   Change     Low    High  Volume                                                                           
  MY PALM OIL      MAR4    2890   +25.00    2880    2893      77                                                                           
  MY PALM OIL      APR4    2891   +24.00    2875    2895     611                                                                           
  MY PALM OIL      MAY4    2888   +21.00    2871    2896   19271                                                                           
  CHINA PALM OLEIN MAY4    6328  +110.00    6278    6330  125876                                                                           
  CHINA SOYOIL     MAY4    7074  +102.00    7048    7090  152692                                                                           
  CBOT SOY OIL     MAY4   44.67    +0.18   44.26   44.70    6549                                                                           
  NYMEX CRUDE      APR4  101.65    +0.09  101.61  102.03   12134                                                                           
                                                                                                                                           
  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 = 3.2605 Malaysian ringgit)
($1 = 6.1185 Chinese yuan)

 (Editing by Prateek Chatterjee)

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