Palm oil rises more than 3% on strong Indian demand

Malaysian palm oil futures rose by more than 3% on October 8, recovering from losses in the previous two sessions. The December contract on Bursa Malaysia Derivatives gained 139 ringgit, or 3.07%, to 4,663 ringgit/t, equivalent to around $1,141/t.

The main support came from strong demand from India. The country bought around 150 thsd tons of crude palm oil in just three days this week for November–December delivery amid disruptions to sunflower oil shipments from the Black Sea region.

Market participants expect continued logistical problems in the Black Sea to push India to replace more sunflower oil with palm oil. Concerns over high Malaysian stocks at the end of September are believed to be largely priced into the market.

Prices were also supported by expectations that Malaysia could propose waiving export duties on crude palm oil. Such a move would improve the competitiveness of Malaysian supplies against rival Indonesian exports.

The market also benefited from an almost 4% rise in crude oil prices. Higher crude prices make palm oil more attractive as a biodiesel feedstock. Meanwhile, Dalian soyoil futures fell by 0.31%, while Chicago soyoil prices rose by 0.74%.

Tags: India, Malaysia, palm oil, palm futures