BLBG: Palm Oil Headed for First Weekly Gain in Four on Export Demand From India
Palm oil gained for a seventh day, the best winning run since February, on speculation demand for the world’s most-consumed vegetable oil will rise as Asia’s most-populous nations approach the festival season.
September-delivery futures rose as much as 1.7 percent to 2,480 ringgit ($773) a metric ton on the Malaysia Derivatives Exchange, and paused at 2,472 ringgit at the mid-day break. The most-active contract is up 7.5 percent this week for the first weekly advance in four.
“We expect demand to pick up as soybean oil’s premium is increasing and demand for Ramadan and Deepavali event will begin,” Herman Koeswanto, an analyst at PT Andalan Artha Advisindo Sekuritas in Jakarta, said in a report today.
China, India, Pakistan and Indonesia mark their important festivals in the quarter ending September, with communal meals stoking edible oils consumption. Soybean oil’s premium over palm oil has risen to $102.07 a ton from a low of $54.939 a ton on April 30 this year. The two oils are direct substitutes.
Greater-than-expected shipments pared June stockpiles in Malaysia, the second-largest producer, to a 10-month low of 1.45 million tons, the country’s Palm Oil Board said July 12. Exports increased 5.5 percent to 1.44 million tons, beating estimates by cargo surveyors Intertek and Societe Generale de Surveillance.
Overseas sales rose 11 percent to 668,573 tons in the first 15 days of this month as an increase in orders from India and the subcontinent made up for a drop in sales to China, Intertek said yesterday. Purchases by India and the subcontinent surged to 160,040 tons from 62,202 tons in the same period in June.
Supply Shortage
“In our view, India will need incremental supplies to meet domestic demand since there’s lack of supplies locally due to lower rainfall,” Koeswanto said.
Earlier this week, Govindlal G. Patel, director of Dipak Enterprise, a trader of vegetable oils, forecast Indian demand would rise. Imports of palm and soybean oils in the quarter to Oct. 31 may be 2.6 million tons, 24 percent higher than a year earlier, Patel said July 13.
September-delivery soybean oil rose 1.2 percent yesterday, while soybeans for November delivery climbed 2.7 percent to $9.88 a bushel on the Chicago Board of Trade.
CME Group Inc.’s September-delivery palm oil contract, pegged to the Malaysian benchmark price, added 8 percent to $763.75 a ton yesterday, the most since the contract started trading in May.
On the Dalian Commodity Exchange, January-delivery palm oil gained as much as 1.6 percent to 6,510 yuan ($961) a ton.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net
