Palm climbs over 3% on Indian demand, duty waiver expectations

KUALA LUMPUR: Malaysian palm oil futures climbed more than 3% on Thursday, recovering from two straight sessions of losses, as robust demand from top buyer India outweighed concerns over rising stockpiles, which the market had already priced in.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 139 ringgit, or 3.07%, to 4,663 ringgit ($1,140.66) per metric ton at the close.

India bought 150,000 tons of crude palm oil in just three days this week for November and December delivery as its sunflower oil shipments from the Black Sea were disrupted due to the Russia-Ukraine war.

“Logistical issues in the Black Sea are only worsening. This will force India to replace lost sunflower oil shipments with palm oil,” a Mumbai-based dealer with a global trade house said.

The prospect of high Malaysian palm oil stocks at the end of September is largely priced in, with the market now awaiting fresh directional cues, said Anilkumar Bagani, research head at vegetable oil broker Sunvin Group.

The market was also supported by speculation that Malaysia may propose waiving export duties on crude palm oil in Friday’s budget session, making its exports more competitive with those of rival Indonesia, Bagani added.

Dalian’s most-active soyoil contract fell 0.31%, while its palm oil contract shed 0.88%. Soyoil prices on the Chicago Board of Trade were up 0.74%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Oil prices rose nearly 4% on persistent worries about supply from the Middle East amid an increase in attacks on shipping in the Gulf and the Strait of Hormuz, while the US cut output as a hurricane menaced offshore production.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.