Palm oil prices are finding support from a recent increase in demand by some importing countries while producing areas in Indonesia and Malaysia are experiencing dry weather, Oil World said.
Demand has increased from buyers in India, China, Europe and other countries, the Hamburg-based researcher said in a report. Futures slid to the lowest in more than five years on Sept. 2 at 1,914 ringgit ($583) a metric ton on Bursa Malaysia Derivatives, and have rebounded 16 percent since then.
“Consumers have reacted to the very low prices and increased purchases,” Oil World said. “This refers to both the food sector and the energy market. Part of the increase in imports was also caused by the interest of consumers to replenish stocks depleted in preceding months.”
Rainfall in the first 20 days of September was “well below normal” in parts of Indonesia and Malaysia, the biggest producers, with the largest deficits occurring in the Malaysian states of Johor and Sarawak, Oil World said. Indonesia saw dry weather especially in Sumatra and parts of Kalimantan, it said.
Palm oil net imports in the European Union rose to a record 3.48 million tons in the first half of this year, 5 percent more than the same time in 2013, Oil World said. The biggest demand increases occurred in Italy, the Netherlands and Spain.
Palm oil demand in Iran may decline amid a potential government policy limiting purchase to a maximum of 30 percent of the country’s total imports of vegetable oils, Oil World said. Imports totaled 600,000 to 700,000 tons in the 2013-14 season that ends tomorrow, down from a record 1.1 million tons the prior year. In the next 2014-15 season, imports may fall further to “at best” 500,000 tons, out of a total import requirement of 1.8 million tons of all oils and fats, according to the report.
To contact the reporter on this story: Whitney McFerron in London at firstname.lastname@example.org
To contact the editors responsible for this story: Claudia Carpenter at email@example.com John Deane, Nicholas Larkin
Source : Bloomberg