Indian demand lifts Malaysian palm oil

Indian demand lifts Malaysian palm oil

KUALA LUMPUR (Reuters): Malaysian palm oil prices will remain
firm in the near term on the back of rising demand, particularly
from major importer India, traders said on Thursday.

But an expected increase in domestic stocks would limit the
market's upside in the longer term, they said.

Local palm oil prices rose sharply in recent days on
supportive export data and short-covering on the physical market,
but pulled back on Thursday on profit-taking.

Malaysia's benchmark third-month (July) crude palm oil futures
contract fell 18 ringgit to 1,660 ringgit (US$437) a ton by
midday on Thursday.

"The market still has underlying strength and should be able
to breach the 1,700 ringgit level," said a trader with a palm oil
refinery.

But there would be strong resistance at around 1,750 ringgit a
ton, he said.

Traders said they expected palm oil demand from India to
remain strong in coming months.

"We estimate that India would import up to 250,000 tons of
palm oil this month from Malaysia and Indonesia," said another
trader.

India took 134,235 tons of Malaysian palm oil in the first 20
days of April compared with 57,465 tons in the same period in
March, cargo surveyor Societe Generale de Surveillance (SGS)
figures showed.

SGS on Tuesday estimated Malaysia's palm oil exports for April
1-20 at 492,768 tons compared with 461,034 tons in March 1-20.

Traders said some Indonesian exporters were actively buying
Malaysian palm olein for nearby shipment to cover sales to India.

"One major exporter (in Indonesia) is said to be short because
of supply tightness there. Moreover, it also makes sense to buy
here as our palm olein is cheaper," the second trader said.

Malaysian palm olein price was currently about $30 a ton
cheaper than Indonesia's, traders said.

They said palm olein's premium over soybean oil was unlikely
to deter Indian buying.

Palm olein is currently priced $80 to $90 above crude soybean
oil, and traders expected the premium to be maintained.

Traders said palm oil prices could come under pressure once
demand slowed and as Malaysian production gradually picked up.

Private crop forecaster Ivan Wong projected Malaysian palm oil
stocks at 775,000 tons by the end of April and 900,000 tons by
end-June. Stocks stood at 716,328 tons at the end of March.

Wong forecast output would rise 11 to 12 percent in April from
March's 703,322 tons.