The price of August delivery palm oil rose to $754 / metric ton (2,476 ringgit); this is the biggest one day increase since April 23rd. The primary reason for the increase, according to Palm Oil HQ, was “short covering and fresh buying interest as crude oil rebounded, trade participants said.”

A further factor in the increase was a pickup in demand from China, the largest consumer of edible oils. According to, “Malaysia’s palm oil exports rose 7.1 percent to 775,995 tons in the first 20 days of May, with higher shipments to China and India offsetting lower deliveries to Europe. Shipments to China and India gained after slumping in April, when the two countries switched to soybean supplies from South America. The pickup comes after China on April 1 banned imports of Argentine soybean oil, saying quality standards were breached.”

Slumping shipments to the European Union have been caused primarily by the combination of the reduced purchasing power caused by the debt crisis and the weak Euro (the ringgit has gone up 24% against the Euro in 2010), which has meant a drop in exports of between 27% - 40%, depending on which source you believe.

Quoted on, Arhnue Tan, a senior analyst at ECM Libra Capital said that “while the numbers have come in positive all month, crude palm oil prices are still quite weak, having reached the lowest in more than three months this week.”

This blogger believes that the price of palm oil has probably “bottomed out” for the foreseeable future. The combination of continuing increased demand from China and India, together with the demand to support the production of biodiesel from Europe and India will send prices upwards, as countries seeks to reduce their reliance on more traditional sources of power. According to, “crude palm oil prices are expected to continue its’ rise as demand grows.”
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