BLBG: Palm Oil Jumps to Six-Week High, First Advance in Three Days
Oct. 22 (Bloomberg) -- Palm oil climbed to the highest price in six weeks as oilseed processors in India, one of the world’s biggest buyers of cooking oils, said imports may increase because local output was unprofitable.
Mills in India may slow crushing of soybeans, peanuts, sunflower and mustard seeds as cheaper vegetable oils flood the market, said Davish Jain, president of the Central Organization for Oil Industry and Trade, the biggest group of processors.
“We can’t compete with the cheaper imported palm oil,” he said in a phone interview yesterday. India abolished the import duty on crude palm oil in April last year, and in March lifted a 20 percent tax on crude soybean oil imports.
Palm oil for January delivery advanced 1.9 percent to close at 2,210 ringgit ($650) a metric ton on the Malaysia Derivatives Exchange. The gain was the first in three days. Futures earlier rose as much as 2.6 percent earlier.
Vegetable-oil purchases by India may top 8.6 million tons, the highest ever, in the year to Oct. 31, up from 6.3 million tons last year, according to the Solvent Extractors’ Association.
“A stronger rupee has made the landed cost of imported oil cheaper than domestic oil,” said Amol Tilak, an analyst at Mumbai-based Kotak Commodity Services Ltd. “Mills won’t crush until prices favor them.”
India imports more palm oil from Indonesia, the world’s biggest palm oil producer, than Malaysia.
Indonesia will keep the duty on exports of the commodity in November unchanged at zero percent for the fourth straight month, a trade official said today.
Imports Jump
Purchases surged 47 percent to 7.98 million tons in the 11 months ended Sept. 30, up from 5.43 million tons a year earlier, the association said Oct. 14. Palm oil imports increased 44 percent to about 6 million tons. The Indian rupee is the third- best performer among the 10 most-traded Asian currencies outside of Japan in the past six months.
Traders who study price history to predict moves said palm oil may test a resistance level of 2,230 ringgit. The six-week high of 2,224 ringgit was 12 ringgit above the 50-day moving average of 2,212 ringgit, data compiled by Bloomberg show. Fibonacci charts show the next technical level is 2,238 ringgit.
Exports to India from Malaysia, the second largest producer, rose for the first 20 days of this month to 70,010 tons from 55,850 tons in the same period in September, said independent cargo surveyor Societe Generale de Surveillance on Oct. 20.
Shipments to India from Indonesia, the biggest producer, advanced for a second month in September, gaining 11 percent from August to 628,000 tons, and showing a 10 percent gain for the first nine months, the Indonesian Palm Oil Association said.
Demand for palm oil, the cheapest edible oil, may increase because of the slower-than-expected harvest of soybeans in the U.S., traders say. Soybean oil has advanced 11 percent this month, more than double the 5 percent gain in palm oil.
About 30 percent of the U.S. soybean crop was harvested as of Oct. 18, less than half the five-year average of 72 percent, the USDA said this week. On Oct. 9, the government forecast soybean production this year at a record 3.25 billion bushels, up 9.5 percent from last year.
To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net; To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net
