Palm oil prices rebound on India's strong demand
The Malaysian palm oil market reversed earlier losses on Wednesday and closed higher after fears that stocks would rise for a third consecutive month, in May, pushed the market lower.
The benchmark contract for palm oil delivery in August on the Bursa Derivatives exchange gained 16 ringgit or 0.41% to $3,950 ringgit (US$930.73) per metric ton.
Anilkumar bagani, the head of research for Sunvin Group in Mumbai, said that palm oil prices are rising as a result of the strong demand expected from India following last week's reduction of import duties.
India's imports of palm oil in May rose to their highest level for six months, due to lower inventories as well as the discount offered by the tropical oil over rivals soyoil or sunflower oil.
Dalian's palm oil contract, which is the most active contract, declined by 0.73%. Chicago Board of Trade soyoil prices rose 0.51%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.
A survey on Wednesday showed that Malaysian palm oil inventories will rise for the third month in a row in May. This is due to a modest increase in production, despite a robust export demand.
AmSpec Agri Malaysia, an independent inspector, estimated that exports of palm oil products from Malaysia had risen by 13.2% in the month of May. Cargo surveyor Intertek Testing Services predicted a 17.9% increase.
The oil prices remained stable on Wednesday, as the Canadian wildfires offset concerns about the next increase in OPEC+'s output. Meanwhile, global trade tensions persist.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The dollar has strengthened by 0.09%, which makes palm slightly more expensive to buyers who hold foreign currencies. ($1 = 4.2444 ringgit) Reporting by Dewi Kurianawati, Editing by Sumana Nady, Rashmi Anich and Shreya Biwas
(source: Reuters)
