Palm hits 4-1/2 month high on El Nino risk

Malaysian palm oil futures reached a four-and-a-half month peak on Monday as traders priced in the risk of supply disruptions caused by an El Nino weather event next year. The benchmark palm oil contract for November delivery on Bursa Malaysia Derivatives Exchange rose 0.25% to 4,819 ringgit ($1,187.53) per metric ton, its highest closing price since April 3.

The previously settled contract fell 0.3%. The crude palm oil futures market remained in contango, with far-month contracts trading above 5,000 ringgit on Monday, suggesting some market participants are positioning for potential supply tightness in 2027 due to expectations of El Nino-related production impacts. The Dalian Commodity Exchange's soyoil contract and the Chicago Board of Trade's soyoil contract both rose.

Palm oil prices track those of other edible oils as it competes for market share. Oil prices were mixed amid ongoing Middle East tensions, but the lack of major supply interruptions limited gains. The Malaysian ringgit strengthened 0.64% against the dollar, making the commodity slightly more expensive for foreign buyers. Cargo surveyor Intertek Testing Services reported August exports of Malaysian palm oil products fell 7.9% compared to the previous month, while AmSpec Agri Malaysia noted a 3.2% increase in exports.

Indonesian President Prabowo Subianto announced plans to establish a new exchange to set prices for the country's strategic commodities by next year, aiming to capitalize on Indonesia's natural resources to spur economic growth.