Asian festivals lend buoyancy to palm oil

Asian festivals lend buoyancy to palm oil
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First Published: Fri, Jul 27 2007. 12 29 AM IST
Updated: Fri, Jul 27 2007. 12 29 AM IST
Jakarta: Palm oil futures in Malaysia, the benchmark for the commodity, rose after exports from the South-East Asian nation picked up, indicating higher demand with the approach of major festivals across Asia in the second half.
This year, China and Chinese people around Asia celebrate the mid-autumn harvest in September, while Hindus celebrate one of their biggest festivals, Diwali, in November. Muslims will fast for a month from mid-September, starting and ending each day with communal meals. Most palm oil is used in cooking.
“Demand is strong due to coming festivities,” said David Chang, research director, at PT UOB Kay Hian Securities in Jakarta. “Any short-term weaknesses provide excellent buying opportunities. Demand is seasonally strong. We saw that palm oil prices came down, and then trended back up immediately,” he added
Palm oil for October delivery, the most actively traded contract on the Malaysia Derivatives Exchange, ended the morning session 21 ringgit (Rs248), or 0.8%, higher at 2,542 ringgit ($740) a tonne. Earlier on Thursday, the contract had dipped 6 ringgit.
In the week ended 20 July, the contract had dropped 4.5%, the biggest five-day decline since the week that ended 9 July 2004.
Exports of palm oil from Malaysia picked up in the five days to Wednesday, according to Societe Generale de Surveillance, a cargo surveyor known as SGS.
Between 21 and 25 July, exports were 298,560 tonnes, 86% more than in the same five-day period in June, according to SGS. Exports to China increased almost eightfold to 118,520 tonnes.
“The trading range is getting narrower,” S. Chandran, a futures trader at CIMB Futures Sdn., said in Kuala Lumpur on Thursday. “We should trade between 2,470 and 2,550, and a break through the upside or downside will determine the future direction.”
India, the second biggest vegetable oil buyer, may boost monthly palm oil imports to 450,000 tonnes through to October, Dorab Mistry, director of Godrej International Ltd, a unit of one of India’s biggest vegetable oil traders, said this week. The forecast compares with average monthly shipments arriving in India of 245,000 tonnes for the past eight months.
Palm oil, the world’s most-consumed vegetable oil, is also used in soaps and can be mixed with diesel to stretch fossil fuel supplies. Indonesia and Malaysia produce 90% of the world’s output of the commodity.
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First Published: Fri, Jul 27 2007. 12 29 AM IST