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| Palm oil gains on higher demand | |
| Bloomberg / Mumbai March 18, 2009, 0:27 IST | |
Palm oil futures in Malaysia rallied on speculation that demand in China and India, the two largest markets, will underpin exports and prices even amid a global recession.
China’s palm oil imports last month gained 54 per cent to 410,000 tonnes from a year earlier, customs data showed yesterday. India’s purchases rose 34 per cent, the Solvent Extractors’ Association said. Malaysia’s exports advanced 16 percent to 591,567 tonne in the first 15 days of March compared with the month-earlier period, Intertek said today.
“Exports continued to show strong year-on-year growth despite the current economic conditions,” said a report by Kuala Lumpur-based ECM Libra Capital Sdn. “There’s definitely reason to be long-term positive on the sector given palm oil¿s position as a basic food consumption product.”
Palm oil for June delivery gained as much as 33 ringgit, or 1.7 per cent, to 1,935 ringgit ($527) a ton before trading at 1,927 ringgit on the Malaysia Derivatives Exchange at 12:01 p.m. local time.
Palm oil, used in food and fuel, is the most produced and consumed edible oil, followed by soybean oil.
The discount of palm oil to soybean oil is helping boost demand.
Soybean oil in Chicago for May delivery were little changed at 30.88 cents a pound, making it 30 percent more expensive than palm oil, according to Bloomberg data.
The discount has narrowed to 39 per cent on average since the year started, from 65 percent in the last quarter of 2008, according to Bloomberg data, in part due to substitution. India, the second largest consumer of vegetable oils, imposed a 20 per cent import duty on soybean oil from November 18, while exempting palm oil from the duties.
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