Palm oil shipments from Indonesia, the world’s largest producer, climbed to the highest level in eight months in October as a decline in supplies of substitute oils in India and China spurred demand from the biggest buyers.
Exports increased 13 percent to 1.86 million metric tons from 1.64 million tons in September, the Indonesian Palm Oil Association, said in an e-mailed statement today. That’s the highest since 1.92 million tons shipped in February and compared with 1.42 million tons in October 2012, according to data compiled by Bloomberg. Shipments beat the median estimate of 1.7 million tons in a Bloomberg survey published Nov. 12.
Increased demand for palm oil, used in everything from candy to cosmetics, amid a drop in output due to heavy rains, may help extend a rally in prices. Futures in Kuala Lumpur entered a bull market this month and are heading for their first annual gain in three years on concern that production in Indonesia and Malaysia, the top growers, may trail estimates.
“Unpredictable weather conditions in some countries have benefited and improved demand for palm oil,” the growers and refiners group known as Gapki said in the statement. Heavy rains may disrupt harvesting and reduce production in Indonesia and Malaysia this month, supporting prices, it said.
Palm oil will probably gain to $975 a ton this month, said Gapki, without providing details of which price it referred to. Futures fell 1 percent to 2,586 ringgit ($809) a ton on Bursa Malaysia Derivatives in Kuala Lumpur by 12:30 p.m. local time.
India and China lifted purchases because of low domestic vegetable oils output and an increase in food and biofuel consumption, Gapki said.
Exports to India rose 13 percent to 488,260 tons in October from a month earlier, Gapki said. Shipments to China surged 62 percent to 296,490 tons, while sales to European Union countries jumped 52 percent to 395,380 tons, it said.
Shipments in the first 10 months of the year rose 20 percent to 17.2 million tons from year earlier, according to Bloomberg calculations.