Palm oil jumped 2.6 per cent to the highest in more than seven months for the best annual performance in 12 years on anticipation demand will increase from India, the second-biggest consumer.
Palm oil, which has more than doubled in the last decade, has rallied 56 per cent this year on rising demand from India and China, the biggest user. Tight supplies of soybean oil earlier this year due to drought damage in South America have also fuelled price gains.
“Demand is expected to be quite strong, especially from India, now that the soybean harvesting is done and yields are not improving,” Ben Santoso, an analyst at DBS Vickers Securities (Singapore) Pte, said by phone from Singapore. “On top of that, Chinese demand is still quite strong.”
March-delivery palm oil gained as much as 2.7 per cent to 2,666 ringgit ($784) a tonne on the Malaysia Derivatives Exchange, the highest intraday price since May 15. Futures were at 2,648 ringgit at 3.49 pm.
“Palm oil is expected to trade between 2,200 and 2,800 ringgit next year and the higher part of that range should happen sometime in the first quarter of 2010,” Santoso said. “I don’t expect any moderation until the end of the second quarter of next year.”
September-delivery palm oil traded on the Dalian Commodity Exchange jumped 3.2 per cent to 7,276 yuan ($1,066) a tonne, the highest since September 4, 2008, bringing this year’s rally to 45 per cent.
Soybean oil in Chicago added as much as 1.8 per cent to 40.64 cents a pound and was at 40.57 cents at 3.51 pm Singapore time.
Indian demand
Vegetable oil imports by India may increase 4.6 percent to 9 million tonnes in the year started November 1, compared with 8.6 million tonnes last year, Govindlal G Patel, director of Dipak Enterprise, said December 8.
Palm oil accounts for 80 per cent of India’s total vegetable oil purchases. India ended the tax on imports of the commodity in April last year, and in March lifted a 20 per cent duty on shipments of crude soybean oil to compensate for a lower domestic crop.
