Palm oil rebounds on stronger soy oil, improved demand outlook

The growth takes this year’s gains to 37%

 pic by TMR FILE

PALM oil advanced on higher prices of rival soybean oil and expectations of an increase in demand from top buyers India and China.

Futures for July delivery climbed as much as 2.2% to RM6,479 a tonne, taking this year’s gains to 37%. Soybean oil and petroleum also rose. Higher energy prices tend to boost the tropical oil’s biofuel appeal.

Stronger soybean oil and crude oil markets are offering good support to the market, said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental.

A cut in global ending stockpiles estimate is also helping the soy complex, he said. Closing soybean reserves for 2021-22 are now seen at 85.2 million tonnes compared to an April estimate of 89.6 million tonnes, according to the US Department of Agriculture.

As Indian reserves are dwindling, demand from the top buyer could rise, he said. Any big drop in palm oil prices would be used as a good buying opportunity, Thiagarajan said, adding that Chinese purchases could also recover after the nation’s strict lockdown rules are relaxed. 

The lack of clarity on when Indonesia could lift its edible oil export ban is also adding some strength to the Malaysian palm oil market, said Anilkumar Bagani, head of research at Mumbai-based Sunvin Group. “I expect that the restrictions will most probably be removed by the last week of this month,” he said.

The Indonesian Palm Oil Association said this week that the world’s top palm oil producer will “hopefully” lift the ban soon so the country can maximise opportunity to meet demand from Europe’s market during supply scarcity of other edible oils. Bloomberg