By Claire Leow and Pratik Parija Dec. 31 (Bloomberg) -- Palm oil jumped 2.6 percent 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 57 percent 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 fueled 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 68 ringgit to 2,663 ringgit ($782) a metric ton on the Malaysia Derivatives Exchange, the highest close since May 15. “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 percent to 7,276 yuan ($1,066) a ton, the highest since Sept. 4, 2008, bringing this year’s rally to 45 percent. Soybean oil in Chicago added as much as 1.8 percent to 40.64 cents a pound and was at 40.42 cents at 6:16 p.m. Singapore time. It is 8 percent more expensive than palm oil, according to Bloomberg data. Indian Demand Vegetable oil imports by India may increase 4.6 percent to 9 million tons in the year started Nov. 1, compared with 8.6 million tons last year, Govindlal G. Patel, director of Dipak Enterprise, said Dec. 8. Palm oil accounts for 80 percent 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 percent duty on shipments of crude soybean oil to compensate for a lower domestic crop. India’s oilseeds production in the 2009-2010 season may drop 9 percent to 13.7 million tons after a drought in almost half the country curbed planting, the Central Organization for Oil Industry and Trade, the country’s biggest group of processors, said in November. India’s cooking oils consumption this year may grow by as much as 6 percent, faster than the historical average of 4 percent, Patel said. Demand surged 12 percent last year after the import tax was revoked. To contact the reporters on this story: Pratik Parija in New Delhi at pparija@bloomberg.net; Claire Leow in Singapore at cleow@bloomberg.net

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