Palm Oil Gains as Surging Indian Demand Seen Cutting Inventories

Palm oil advanced on speculation that reserves in Malaysia may drop from a record as India, the world’s largest importer, boosts purchases.

The contract for delivery in April gained 0.2 percent to close at 2,552 ringgit ($825) a metric ton on the Malaysia Derivatives Exchange. Futures have gained 4.7 percent this year.

India’s purchases of cooking oils probably surged 74 percent to a record 1.15 million tons in January from 659,979 tons a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. Malaysia, the largest producer after Indonesia, set the duty to export crude palm oil at zero in January and extended it to February to clear stockpiles, which were at a record 2.63 million tons in December.

“India being a price-sensitive market, it will always look for cheaper alternatives,” Prathamesh Mallya, an analyst at AnandRathi Commodities Ltd., said from Mumbai. “Malaysian exports may gain as the zero-export duty would attract Indian buyers. That would probably remove inventories from Malaysia.”

Stockpiles in Malaysia probably fell 3.8 percent to 2.53 million tons in January from the all-time high in December, according to a Bloomberg survey published yesterday. The Malaysian Palm Oil Board is due to release the data on Feb. 13.

The country will allow crude palm oil exports at the zero rate for a third month in March if prices remain below a threshold of 2,250 ringgit a ton, Plantation Industries and Commodities Minister Bernard Dompok said Feb. 4.

Refined palm oil for delivery in September dropped 0.3 percent to close at 7,116 yuan ($1,142) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month dropped 0.5 percent to end at 8,764 yuan a ton.

Soybeans for March delivery declined 0.4 percent $14.8125 a bushel on the Chicago Board of Trade, while soybean oil for March delivery lost 0.4 percent to 52.23 cents a pound. Soybean oil costs about 1.39 times the price of palm oil.

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