Palm oil rises on China outlook

Palm oil futures in Malaysia, the global benchmark, rose for a second day on the demand outlook from China, the world's biggest buyer of vegetable oils, as concern faded that global economic growth may slow.

China imported 2.7 million tonnes of palm oil in the first seven months of the year, 4.5 per cent more than the same period last year, according to revised trade data from the Beijing-based customs office today. That's 17 per cent higher than a preliminary estimate of 2.3 million tonnes.

"The fundamentals for crude palm oil remain intact," said Liliana Bambang, an analyst at Mandiri Sekuritas. "We estimate the palm oil price to be $700 a tonne for 2007 and $730 a tonne for 2008," referring to the average for the year.

Palm oil for November delivery rose 11 ringgit, or 0.5 per cent, to 2,407 ringgit ($689) a tonne on the Malaysia Derivatives Exchange by the midday break. The commodity has averaged 2,243 ringgit a tonne since the year started.

Malaysia's palm oil exports rose 21 per cent to 769,315 tonnes from August 1-20 compared with the same period a month earlier, according to estimates by independent cargo surveyor Societe Generale de Surveillance August 20. Exports to China surged 65 per cent to 234,549 tonnes.

The world's most populous country is preparing for its mid- autumn festival marking the harvest, the second most important celebration on the calendar.

Malaysia and Indonesia produce about 90 per cent of the world's palm oil. Palm oil is used mainly as a cooking fat and to make cleaning agents.