Palm oil rises to near 4-week peak on strong Indian demand

KUALA LUMPUR: Malaysian palm oil futures rose to a near four-week high on Tuesday, lifted by strong export demand as India resumed purchases of refined palm oil after a one-year gap.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained 70 ringgit, or 1.8%, at 3,950 ringgit ($951.23) a tonne by the midday break, its highest since June 10.

India's demand for Malaysian crude palm oil and Indonesian palm olein has been strong since Thursday, but it is likely to subside at current price levels and the market will reverse very quickly, said Marcello Cultrera, institutional sales manager & broker at Phillip Futures in Kuala Lumpur.

Palm is set to extend a five-day winning streak.

Cultrera warned it was unrealistic for prices to hit the record highs it saw in May due to Indonesia's fast rising supply and its widening discount over Malaysian palm oil.

"As import and processing margins at destinations are eroding slowly, Indonesian crude and refined palm oil are now trading at a $8.5 and $10 discount against Malaysia's products," Cultrera added.

Dalian's most-active soyoil contract gained 0.7%, and its palm oil contract rose 1.3%. The Chicago Board of Trade was closed for a public holiday.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Oil prices extended gains, with Brent and WTI hitting their highest since 2018 on expectations that supplies will tighten further, making palm a more attractive option for biodiesel feedstock.

Palm oil may test a resistance at 3,931 ringgit per tonne, a break above which could lead to a gain into a range of 4,009-4,105 ringgit, Reuters technical analyst Wang Tao said.