Palm Oil Rallies From 17-Month Low on India's Tender, Crude Oil

By Jae Hur

Sept. 18 (Bloomberg) -- Palm oil in Malaysia rose for the first day in four, recovering from a 17-month low, after India called bids to import the vegetable oil and after crude oil jumped, boosting demand prospect for biofuel.

India's PEC Ltd. is seeking to buy 5,000 tons of crude palm oil for delivery between Sept. 20 and Oct. 15 to ease a shortage. Oil jumped 6.6 percent yesterday, the most since June 6. Vegetable oils, used mainly in food, often follow crude prices as they can be used to produce biofuels.

``The gain in crude overnight and the Indian tender provided support for palm oil together with a technical rebound after the decline in the past three days,'' said Merlissa Paramitha Trisno, an analyst with PT Mandiri Sekuritas in Jakarta.

Palm oil for November delivery added 7.1 percent to close at 2,185 ringgit ($631) on the Malaysian Derivatives Exchange. The contract earlier declined as low as 2,020 ringgit, the lowest since March 28, 2007.

The futures fell 14 percent in the previous three days and have more than halved from a record 4,486 ringgit March 4. Palm oil's 14-day relative strength index, a gauge of momentum, fell below 30 yesterday, signaling prices may rise.

``I'm still bearish for palm oil because of an increase in production and lower demand from Europe for biofuel production,'' Trisno said.

Soybean oil for December delivery on the Chicago Board of Trade was up 0.9 percent to 44.82 cents per pound at 6:01 p.m. Singapore time.

Indonesian Tender

In the physical market, Indonesia's state marketing center accepted bids for 17,500 tons out of 19,500 tons of palm oil offered in a tender today, said Aziz Kahar, head of sales.

The center, that sells palm oil from state plantations, sold 1,000 ton ex-factory Medan and 5,000 ton on a free on board basis from Belawan port, both in North Sumatra province, to PT Musim Mas at 5,182 rupiah a kilogram ($551 a ton), he said.

PT Inti Benua Perkasatama bought 4,000 tons from Dumai port in Riau at 5,182 rupiah.

PT Bukit Kapur Reksa purchased 1,000 tons from Siak port in Riau at 5,092 rupiah, 500 tons ex-factory Ophir in West Sumatra at 4,967 rupiah, and 1,000 tons Tanjung Lebar in Jambi at 4,907 rupiah, Kahar said. The company also bought 1,000 tons ex-factory Bunut at 4,922 rupiah and 4,000 tons Tayan in West Kalimantan at 4,842 rupiah.

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net