KUALA LUMPUR: Malaysian palm oil futures rose nearly 6% on Tuesday, tracking gains in rival soyoil on bleak forecast for US soybean harvest, while strong demand from key buyer India provided an added boost.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange extended gains to a third straight session, rising 217 ringgit, or 5.89%, to 3,900 ringgit ($865.51) a tonne, its highest daily rise in more than 6 weeks.
India’s palm oil imports in August jumped 87% from a month ago to the highest level in 11 months as a sharp drop in prices prompted refiners to ramp up purchases, a leading trade body said on Tuesday.
Demand from India, the world’s biggest vegetable oil consumer, is expected to ramp up this month ahead of the festive season in October.
Exports during Sept. 1 to 10 rose between 9.3% and 25.5% from the same period in August, cargo surveyors said.
Malaysia’s palm oil stocks at end-August climbed to their highest in 33 months, as output rose with peak production season getting underway, palm oil board data showed on Monday.
Production is expected to keep rising in September and may push inventories 9.2% higher to 2.29 million tonnes, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
CGS-CIMB Research projected crude palm oil prices to trade in the 3,500-4,500 ringgit per tonne range due to tougher competition from top producer Indonesia, although palm’s high discount against soyoil will encourage demand.
Soyoil prices on the Chicago Board of Trade rose 1.9%, extending overnight gains after the US Agriculture Department said soybean supplies will fall to seven-year lows as hot and dry weather during August in western growing areas hits harvest potential.
Dalian’s most-active soyoil contract rose 3%, while its palm oil contract gained 3.2%.
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