-- Malaysian palm oil futures extended gains for a third straight session on Thursday, tracking higher crude oil and rival soybean oil, but prices were set to decline around 5% over the month largely due to weaker export performance.
The Bursa Malaysia Derivatives' May crude palm oil contract rose 0.82% to 4,542 Malaysian ringgit ($1,143.50) per metric ton. The June contract was up 0.75% to 4,579 ringgit/mt in midday trade.
"The situation in the Middle East has pushed up international oil prices, driving palm oil futures higher again," price reporting agency MySteel said.
Stronger Chicago soybean oil prices and a weaker local currency also provided an upside, according to PhillipCapital, as cited by Dow Jones.
Other supportive factors helping prop up prices this week include the announcement of richer biofuel blends in conventional fuel in Indonesia and Malaysia and weather-related supply risks.
However, MySteel said "the market may refocus on near-term pressure in the physical market."
Weakening fundamentals continued to weigh on prices, particularly with a reported 15.7% to 16.8% month-over-month decline in Malaysian shipments for the April 1-25 period, as estimated by cargo surveyors.
Expectations of higher production in the coming months following a seasonal low also added to negative sentiment.
Meanwhile, the full-year production outlook points to tighter supplies, due to concerns over surging fertilizer costs and a possible drought.
Eddy Martono, chairman of the Indonesian Palm Oil Association, warned that the country's palm oil output could drop by 1 million to 2 million tons, if the El Nino weather phenomenon develops and if farmers delay the application of fertilizer toward the end of the season, Reuters reported.
"In the short term, palm oil prices are expected to trade in a range," MySteel said, citing limited support provided from elevated crude oil prices.