New Delhi: Palm oil futures in Malaysia surged on expectations of a pick-up in seasonal demand and after a recovery in crude oil and rival soya bean oil increased its appeal for use as a substitute in both food and alternative fuels.
The vegetable oil, which touched a 15-month low on Tuesday, was boosted after crude gained for a second day as a weak dollar spurred demand for commodities as an inflation hedge.
“There are more buyers now as it is a month away from the festive season,” said Ben Santoso, a plantation analyst at DBSVickers Securities (Singapore). “It also follows crude and soya bean oil.”
Demand may rise as Muslim nations in West Asia celebrate Id-ul-Fitr in October, while India may increase purchases of vegetable oil before the festival of Diwali in the same month.
Palm oil for November delivery rose as much as 6.5% to 2,594 ringgit (Rs30,000) a tonne and closed at 2,591 ringgit at 6pm in Kuala Lumpur. Prices have plunged 42% from the 4 March record of 4,486 ringgit.
Crude oil for October delivery rose as much as 0.7% to $115.36 (Rs5,041) a barrel in New York trade on Wednesday evening India time and were trading around $114.50 a barrel. Soya bean oil rose as much as 2.5% to 54.5 cents a pound (about 450g) in Chicago.
Malaysia’s palm oil exports rose 8.4% in the first 20 days of August, compared with the same period the previous month, according to independent surveyor Intertek.
A total of 904,645 tonnes of palm oil were tracked 1-20 August, Intertek said on Wednesday in a report.
Malaysia exported 834,317 tonnes of the commodity in the same period in July, the surveyor said.
In the physical market, Indonesia’s state marketing centre accepted bids for 8,500 tonnes of the 10,500 tonnes of palm oil offered in a tender on Wednesday, Aziz Kahar, head of sales, said from Jakarta.
The centre, that markets palm oil from state plantations, sold 3,000 tonnes from Belawan Port in North Sumatra and 1,500 tonnes ex-factory Medan to PT Pacific Palmindo Industri, both sales at 6,635 rupiah (Rs31) a kg.
PT Inti Benua Perkasatama bought 2,000 tonnes from Dumai Port in Riau at 6,635 rupiah a kg and 1,000 tonnes from Siak Port in Riau province at 6,545 rupiah a kg. PT Indokarya Internusa bought 1,000 tonnes from Boom Baru Port and South Sumatra at 6,498 rupiah a kg.
Naila Firdausi in Jakarta contributed to this story.