Palm oil hovers at over 8-year high on lower Oct inventories, output
- The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange settled 0.9% higher at 3,256 ringgit ($790.68) a tonne,
- export shipments from Malaysia during Nov. 1-10 fell between 17% and 19%, cargo surveyors said.
KUALA LUMPUR: Malaysian palm oil futures on Tuesday rose to their best level in 8-1/2 years as a sharp decline in inventories in October offset pressure from weak Nov. 1-10 exports and lower Dalian oils.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange settled 0.9% higher at 3,256 ringgit ($790.68) a tonne, the highest since May 2012.
Palm oil inventories in October slumped to their lowest in more than three years on tight production and higher exports following seasonal buying from key importer India, Malaysian Palm Oil Board data showed.
However, export shipments from Malaysia during Nov. 1-10 fell between 17% and 19%, cargo surveyors said.
"Prices are likely to be challenged by lower November exports as shipments to India dry up post-Diwali," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics. Diwali, the Indian festival of lights, is set for Saturday.
Palm oil, the world's cheapest vegetable oil, is facing a problem as it is now trading at a premium above competing soyoil on the Chicago Board of Trade, and $445 per tonne over gas oil, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Higher palm prices make it less competitive against rival edible oils, and an unsustainable option as biodiesel feedstock.
Soyoil prices were up 0.3%. Dalian's most-active soyoil contract slipped 1%, while its palm oil contract fell 0.8%.
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