Palm prices end higher due to strong buying activity

After seven sessions of losses, palm oil futures in Malaysia closed higher Thursday. They had fallen to their lowest level since September. This was due to strong demand from India and China, the two largest consumers.

The benchmark contract for palm oil delivery in July on the Bursa Derivatives exchange gained 73 Ringgit or 1.96% to 3,801 Ringgit ($888.71).

Anilkumar bagani, the research head at Mumbai-based Sunvin Group and a vegetable oil broker, said: "The futures started lower but quickly gained some ground on the back of Indian purchasing and short covering following a significant drop in recent months."

India is actively purchasing crude palm oil while China has made purchases of refined palm olein (RBD), bleached, and deodorized this week, for delivery between May and September.

The dealer stated that stock levels are lower in India and China than usual, and that the price correction provides an opportunity to increase them at a lower rate.

Dalian's palm oil contract, which is the most active contract, fell 0.2% while soyoil prices dropped 0.13%. Chicago Board of Trade soyoil prices were up by 1.01%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.

Dorab Mistry, an industry analyst, said that Malaysian palm futures will likely continue to decline from June through November and trade at a level near the two-year low price of 3,500 Ringgit as a recovery in production results in a buildup of stocks.

Oil prices held steady Thursday as hopes for a breakthrough in the upcoming trade talks between China and the U.S., the two world's largest oil consumers, were raised.

The palm ringgit's trade currency, the U.S. Dollar, has weakened by 0.99%, making it cheaper for foreign buyers. $1 = 4.2770 Ringgit (Reporting and editing by Mrigank Dahniwala and Rajendra Jadhav, Savio de Souza and Vijay Kishore).

(source: Reuters)