Oct. 5 (Bloomberg) -- Palm oil advanced, paring a third weekly loss, as a slump to the lowest price in almost three years spurred demand from importers.
The contract for December delivery gained 2.7 percent to close at 2,415 ringgit ($791) a metric ton on the Malaysia Derivatives Exchange. Prices dropped 5.2 percent this week after falling to the lowest close since November 2009 on Oct. 2.
Palm oil has dropped 20 percent since the end of August as a global economic slowdown weakened demand for the oil used in everything from candy to biofuel amid an increase in output in Indonesia and Malaysia. Inventories in Malaysia probably increased 15 percent to a record 2.43 million tons in September from 2.12 million tons in August, the median of estimates from five analysts and two plantation companies showed.
“The demand undertone is fairly good,” said Vijay Mehta, a director at Commodity Links Pte. in Singapore. “If the market stabilizes, buyers are willing to jump in. There is good buying interest from India and Bangladesh.”
Futures may rally to 3,250 ringgit by the end of the fourth quarter, Abah Ofon, an analyst at Standard Chartered Plc, wrote in a report today. The recovery will be driven by a drop in Malaysian production as the high output season ends, and as Indonesian inventories dwindle because of stronger demand from China and India, the biggest users, he said.
Malaysia will study a proposal to cut export taxes on crude palm oil and will decide “soon”, the Plantations Industries and Commodities Ministry said today. Plantations Minister Bernard Dompok had on Oct. 3 proposed a cut in taxes to between 8 percent and 10 percent from the current 23 percent.
Malaysia’s output climbed 10 percent to 1.83 million tons in September from 1.66 million tons, while exports rose 4.9 percent to 1.5 million tons from 1.43 million tons, the survey showed. The data are released on Oct. 10.
Soybean oil for December delivery was little changed at 51.51 cents a pound on the Chicago Board of Trade. Soybeans for November delivery were little changed at $15.5075 a bushel.
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