By Claire Leow
July 28 (Bloomberg) -- Palm oil futures climbed on optimism a global economic recovery will sustain export demand, led by orders from China, the largest consumer.
“Our China team expects China’s consumption to remain strong from the second half of 2009 onwards,” a UOB Kay Hian (Malaysia) Holdings Sdn. report said. “China’s demand for edible oils grew at 10-year compounded annual growth rate of 9.5 percent on the back of the population growth and urbanization.”
Palm oil for October delivery gained as much as 1.4 percent to 2,127 ringgit ($604) a metric ton on the Malaysia Derivatives Exchange and was up 1 percent at 2,118 ringgit a ton at the 12:30 p.m. trading break.
Prices may hold at these levels, Sabri Ahmad, chairman of the Malaysian Palm Oil Board, said in Kuala Lumpur today.
Exports from Malaysia, the second-largest producer, are poised to gain for a third month in July. Shipments rose to 1.085 million tons in the first 25 days of July, 10 percent higher than the same period in June, independent cargo surveyor Societe Generale de Surveillance estimated.
A six-month rally in palm oil futures ended in May and prices have fallen about 24 percent from an intraday high of 2,799 ringgit a ton on May 13, trimming this year’s gain to 25 percent.
Demand typically peaks at this time of the year as orders grow ahead of major festivals across Asia and the Middle East. The Muslim holiday of Ramadan starts next month, while Hindus celebrate Diwali in October and the Chinese mark the mid-autumn festival in the same month. All three events are marked by celebratory meals, boosting edible oil demand.
Palm oil for January delivery on the Dalian Commodity Exchange, the most-active contract, gained 2.5 percent to 5,776 yuan ($846) per ton at the 11:30 a.m. local time trading pause.
To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net
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