Palm Oil Gains to Two-Week High as Exports Seen Rising on Demand

Palm oil advanced to a two-week high on speculation that exports from Malaysia may rise further after climbing for the first time in three months in June, and as a survey showed increased imports by India.

The contract for September delivery advanced 1 percent to 2,399 ringgit ($751) a metric ton on the Bursa Malaysia Derivatives, the highest price at close for the most-active futures since June 25. Palm for local physical delivery in July was at 2,390 ringgit, data compiled by Bloomberg show.

“It’s still summer in the northern hemisphere, so demand should stay strong,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. “Although production may increase slightly, the increase in demand should be able to absorb the higher production in July.” The tropical oil, used in everything from noodles to soaps, clouds in colder temperatures.

Exports from Malaysia, the second-largest producer, gained 4.1 percent to 1.47 million tons in June from a month earlier, a Bloomberg survey published last week showed. Output rose 6.2 percent to 1.47 million tons and reserves fell 3.7 percent to 1.75 million tons, the least since June 2012, according to the survey. Official data by the Malaysian Palm Oil Board are scheduled for release tomorrow.

Imports by India, the largest buyer, probably increased for a second month in June as lower prices spurred demand. Inbound shipments gained 34 percent to 680,000 month from 505,738 tons a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg. The Solvent Extractors’ Association of India will release the data next week. Palm in Kuala Lumpur dropped 2.2 percent in June.

‘Consumes More’

“The reason India is importing so much palm is because at this point in time, we have a shortage of soybean oil,” said Prathamesh Mallya, an analyst at AnandRathi Commodities Ltd. in Mumbai. “Also, the Muslim population in India consumes more palm whenever it is Ramadan.”

Consumption typically increases during the Muslim fasting month of Ramadan, which starts this week, when observers break day-long fasts with communal meals that raise total demand.

Soybean oil for delivery in December rose 0.7 percent to 46.19 cents on the Chicago Board of Trade, while soybeans for delivery in November advanced 1.7 percent to $12.73 a bushel.

Refined palm oil for January delivery gained 0.4 percent to close at 5,872 yuan ($958) a ton on the Dalian Commodity Exchange, while soybean oil for delivery in the same month climbed 0.5 percent to end at 7,272 yuan.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE