(June 26): Palm oil advanced on rising Malaysian exports and expectations of better demand from the biggest buyer India as festival season nears.
Benchmark futures rose towards RM4,600 (US$1,122) a tonne on Bursa Malaysia Derivatives, paring a weekly loss. Malaysian exports rose 11% in the first 25 days of June compared with the previous month, including higher shipments to India, according to Intertek Testing Services. Data from another surveyor, Amspec Agri, also showed exports increased by a similar amount.
Demand from India is expected to rise over the next four months until the peak Hindu Festival of Lights in November, said Aashish Acharya, vice-president at Patanjali Foods Ltd, one of the nation’s top vegetable oil buyers. Nearer term, there will also be a lift from hotels and restaurants as the government has eased curbs on cooking gas imposed because of the Iran war, he said.
India removed all sectoral restrictions on the supply of non-domestic packed liquefied petroleum gas, and supplies have returned to levels seen before the conflict, the Ministry of Petroleum and Natural Gas said on Thursday. That should ease shortages, boosting palm oil use by restaurants.
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A mix of positive export fundamentals, and a premium linked to the El Niño weather pattern, is supporting prices, said Sathia Varqa, a senior analyst at Fastmarkets Palm Oil Analytics in Singapore. Some buyers also took advantage of weaker prices after they fell to the lowest in more than a week, Varqa said.
See also: Aluminium falls to lowest since February as dollar strengthens
Asia is braced for the arrival of a so-called Super El Niño. The event — triggered by a sustained warming of Pacific Ocean surface temperatures — can lead to drier-than-normal weather in Southeast Asia. That region includes Malaysia and Indonesia, the largest palm oil suppliers.
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