The edible oil segment witnessed notable gains in August, with palm oil being the top performer in the domestic commodity market. It outperformed at the Bursa Malaysia Derivatives (BMD) global exchange, hitting a six month high of 2,263 Malaysian ringgits a tonne, mainly due to output concerns and robust demand.
The current hardening of crude oil prices due to the attack on Saudi facilities has compensated, to a certain extent, for the losses caused by the hikes in Indian import duties on Malaysian palm. However, the situation in Saudi Arabia is expected to normalise over the next few days. In the near term, squeezed supply and ongoing festival demand are likely to provide underlying support to palm oil prices.
However, high stocks in India, the EU’s strict policy regime for phasing out palm oil, and China turning softer on its import of American soya (a substitute of palm oil) are likely to cap the price gain.
India, the spoilsport
India is the world’s largest consumer, accounting for one-fourth of the global palm oil demand. It imports more than 90 percent of its requirements from Malaysia and Indonesia.
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